Update On Steelmakers From Reuters

Here is an article updating the views on the steelmakers and how they are facing headwinds. Of course they will as there is no real recovery. Had China not been supporting its economy by pushing government spending on infrastructure to make up for the slack from exports (brilliant move for the Chinese by the way - it is textbook, same thing the US did late 1800s early 1900s), the steelmakers would have been in bigger trouble. Another reason they are doing better than they would have otherwise is the fact that steel prices have been rising as investors and governments such as China try to diversify out of US dollars and into hard assets.

Here is the article:

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WRAPUP 2-4th-qtr results show U.S. steelmakers face headwinds

* U.S. Steel posts Q4 loss, sees more red ink in Q1

STOCKS  |  BONDS  |  GLOBAL MARKETS

* Nucor posts profit but warns of rising costs

* U.S. Steel shares drop 11 pct, Nucor down 1.29 pct (Adds Nucor CEO comments, closing stock prices)

By Steve James

NEW YORK, Jan 26 (Reuters) - U.S. steelmakers are making a slow recovery from the recession and still face rising raw material costs and other headwinds, quarterly results showed on Tuesday.

U.S. Steel Corp (X.N) posted its fourth consecutive quarterly loss and forecast more red ink in the current quarter, sending its shares down 11.77 percent to $49.61 on the New York Stock Exchange.

Nucor Corp (NUE.N) moved into the black after three quarters of losses but said demand was still hampered by weak markets, especially in the construction sector. Nucor's stock finished down 1.29 percent at $43.56.

Nucor's Chief Executive Officer Dan DiMicco told analysts on a conference call: "Our view remains that real demand is in for a long, slow recovery.

"The fact is, the market stinks ... no product group, no product type, no end market is anywhere near back to where it was two years ago. Raw material costs are putting pressure on everybody."

On Monday, AK Steel Holding Corp (AKS.N) reported a fourth-quarter profit but forecast lower operating profit in the first quarter due to spiraling costs for raw materials like scrap and iron ore.

Asked about the construction market, which relies heavily on steel, DiMicco said: "The reality is, the early part of this year will probably be worse than last year. We have not really seen much of anything from the ... first stimulus package on infrastructure."

Analyst Michelle Applebaum of Steel Market Intelligence in Chicago noted that U.S. Steel and Nucor gave "subdued guidance" for the first quarter of this year, with U.S. Steel giving a warning of an operating loss.

"Steel prices in the U.S. and globally are rising at a rapid clip due to a combination of Chinese demand, running raw material costs and slow restarts. We expect to see margin pressure for the blast furnace steelmakers (like U.S. Steel) ... continue through at least the second quarter," she said.

U.S. Steel's fourth-quarter net loss was $267 million, or $1.86 per share, wider than Wall Street expected, compared with a year-earlier profit of $290 million, or $2.50 per share. Revenue dropped to $3.4 billion from $4.5 billion, the Pittsburgh-based company said.

"We expect to report an overall first-quarter 2010 operating loss in line with the fourth-quarter 2009 as gradually improving business conditions are not yet fully reflected in our operating results," said Chairman and Chief Executive Officer John Surma.

Unlike U.S. Steel, which uses iron ore to make steel in coal-fired blast furnaces, Nucor is a mini-mill manufacturer that uses scrap as its raw material for electric arc furnaces.

Nucor posted its first quarterly profit of 2009, but earnings were down almost 50 percent from a year earlier and revenue fell 29 percent to $2.94 billion.

The company said that while it expects steel mill shipments to rise about 5 percent in the first quarter, it also expects significant increases in scrap costs. (Reporting by Steve James; Editing by John Wallace, Toni Reinhold)

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