) is being removed from the S&P 500 effective after the close
on Jul 1. The benchmark index will add NC-based construction
) in its roster in place of the nation's largest steel maker by
U.S. Steel, which is in the steel-making business for more than
110 years, will replace Martin Marietta in the S&P MidCap 400
list. The Pittsburgh-based steel maker's current market
capitalization (of roughly $3.8 billion) makes it more befitting
for the mid-cap market space.
U.S. Steel's shares, which closed at $26.02 last Friday, slipped
around 1.2% in extended trading. The company has seen its shares
sag around 11.5% so far this year versus a roughly 7% gain for the
U.S. Steel, once the country's first billion-dollar corporation,
was founded in 1901 by J.P. Morgan and other legendary businessmen
through the merger of Federal Steel Company with the Carnegie Steel
Company and other steel and iron businesses with an authorized
capitalization of $1.4 billion.
U.S. Steel, which remains beset by weak steel market
fundamentals, posted losses in each of the last five years on weak
demand. It was ousted from the Dow Jones Industrial Average in
The U.S. market is seeing surging imports of steel products.
This, in addition to the oversupply, is further pressurizing prices
and prospects of steel producers including U.S. Steel,
Oversupply in the industry has put pressure on steel prices as
Chinese steel production has outpaced demand. The low costs of
production in China enable the local producers to sell their
product at cheaper rates, leading to an industry-wide price
decline, hurting margins and earnings power of U.S. Steel in the
While healthy automotive demand, aggressive cost management and
increased cokemaking capabilities are expected to benefit U.S.
Steel, it is exposed to certain near-term operational
U.S. Steel, a Zacks Rank #3 (Hold) stock, is expected to face
raw material cost (primarily for purchased scrap and energy)
pressure and delivery issues as well as maintenance outages in the
Moreover, bad weather-related logistic bottlenecks are expected
to affect production and shipments in second-quarter 2014, leading
to a loss in the company's flat-rolled segment. U.S. Steel's
European division is also expected to see weaker results in the
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