Poor economy hurts steel industry

Poor economy hurts steel industry

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Associated Press | Posted: Wednesday, October 27, 2010 12:00 am

The steel industry's outlook has dimmed with the unevenness of the global economy. Sales have dropped with prices while costs have risen, leaving companies pessimistic about the rest of the year.

Two of the world's biggest steel manufacturers turned in third-quarter performances Tuesday that demonstrated how much expectations have changed since mid-year as many countries and regions fail to generate significant growth.

ArcelorMittal, the world's largest steel maker by output, and U.S. Steel Corp., the biggest U.S. steel company, said the lack of recovery in the construction market, a huge customer, is a primary drag on results. Other key industries, such as autos and appliances, are faring better but still aren't using steel at pre-recession rates.

Argus Research analyst Bill Selesky said steel customers are worried about future growth, which has cut into their orders. "They don't see it picking up noticeably down the road," he said.

As a result, U.S. Steel, which in July predicted a profit for the third quarter, instead reported a $51 million loss. The company, which owns Granite City Works, blamed the decline largely on the choppy recovery in North America and Europe, a weak construction market and seasonal buying patterns.