Steel prices have been rising. More tariffs are expected. U.S. Steel is supposed to be turning it around.
That's why Tuesday's report that U.S. Steel lost $180 million in the first quarter stunned investors, and caused U.S. Steel stock to plummet by up to 26 percent, the biggest one-day drop since at least 1991.
U.S. Steel stock had closed at $31.11 per share Tuesday before the company released its first quarter results, which fell far short of analysts' projections and was described as "abysmal." When the markets closed Wednesday, the stock plunged 26.78 percent, or $8.33 a share, to $22.78 a share.
That was the steepest one-day drop on Wall Street on Wednesday and the lowest U.S. Steel stock has fallen since the November election.
U.S. Steel lowered its guidance to say it only expected to make $260 million this year, or about $1.50 per share.
"I've got a few questions obviously. I think a lot of people do. From last quarter to this quarter, it's a pretty big change," BMO Capital Markets analyst David Gagliano said during a conference call Wednesday. "You cut your guidance by 35 percent in a rising price environment, with improving conditions."
Chief Executive Officer Mario Longhi cut back on maintenance projects while the company was losing money over the last few years, which is hurting the company's revenues now that tariffs have restricted steel supplies and prices are climbing.
The Pittsburgh-based steelmaker expects to spend about $300 million more this year than in 2016 on maintenance, which will result in outages at its mills, less production and lower revenue.
Longhi said during a conference call with investors Tuesday the restart of the hot strip mill at Granite Works allowed U.S. Steel to do a 10-day outage at the Gary Works hot strip mill, "one of our most critical assets."
He said U.S. Steel "completed several projects that will improve the reliability, quality and product capabilities of that mill, including improving and expanding our ability to provide substrate to domestic welded pipe producers for pipeline projects."
U.S. Steel estimates the project will increase productivity at the Gary Works strip mill by 5 percent this year and as much as 13 percent by 2019.