U.S Steel Reports Q3 Loss; Lowers 4Q Guidance

Goldman is lowering its 4Q2010 EPS estimate on U.S Steel X to a loss of $0.94 from a profit of $0.08 due to higher cost assumptions and lower production. US Steel reported a 3Q loss of $1.20 per share after adjusted for one-time items. The company expects no sequential change in its carbon flat steel operations in the US and Europe, and lower operating income for the tubular division. Goldman lowers its FY2010E EPS to a loss of $2.80 from a loss of $0.30. There is no change to the 2011/2012/normalized estimates. Although we see 4Q as the bottom for the domestic steel industry in the current cycle, Goldman expects a slow recovery. US Steel's domestic flat rolled division will struggle to make profit at the low capacity utilizations are presently seeing. The repair and maintenance activities are further amplifying losses. At the European division, losses were due to much higher raw material costs and maintenance expenses. Goldman has a Neutral rating with a $39 PT on X U.S Steel closed Tuesday at $40.85