The largest US-based steelmaker and other producers have been hurt by sharply lower orders from steel-intensive industries such as construction and autos.

While demand and prices have picked up recently, they remain well below record levels reached last summer.

"Our order book and operating rates remained at very low levels, spot-market prices declined and we continued to incur carrying costs for our idled facilities," US Steel Chief Executive Officer John Surma said in a statement.

US Steel lost US$392 million, or US$2.92 per share, in the three months ended June 30.

That compares with a profit of US$668 million, or US$5.65 per share, in the year-earlier period.

A gain from foreign currency exchange narrowed the latest loss by US$41 million, or 31 cents per share.

Quarterly revenue fell 68 per cent to US$2.13 billion.

Losses

Analysts surveyed by Thomson Reuters, on average, expected a loss of US$3.45 per share on revenue of US$2.39 billion.

Those estimates generally exclude one-time items.

All three of US Steel's business segments reported losses. But they narrowed from the first quarter at its European operations and North American flat-rolled business.

Flat-rolled, or sheet steel, is used in autos and appliances.

Its tubular business - which makes pipes used in oil and gas drilling, reported a second-quarter loss after a profit a year earlier.

Still, the company's bottom line improved over the first three months of the year, and it expects steel production to rise this summer from extremely low levels in the April-June period.

A rise in orders in recent weeks indicates customers may be replenishing their stockpiles of steel in North America and Central Europe, Surma said.

To meet the demand, US Steel has begun to restart idled mills and raise prices in its flat-rolled and European businesses.

"Despite these signs of improvement, the outlook for overall demand remains uncertain and the timing and magnitude of sustained economic recovery remains difficult to forecast," he said.

The company expects its mills to ramp up operations in the third quarter "from the extremely low levels of last quarter," but still sees each of its businesses posting an operating loss for the July-September period, Surma said.

US Steel did not provide estimates for third-quarter results.

During the second quarter, the company raised US$1.5 billion through stock and debt offerings, and repaid US$655 million of loans due in 2010 and 2012.

Economic slowdown

US Steel has laid off thousands of workers and temporarily idled plants since late last year, when steel demand began plunging amid the credit crisis and economic slowdown.

In April, the Pittsburgh-based company posted its first quarterly loss in more than five years, citing anaemic demand, and announced steps to cut costs and raise capital.

Shares fell 94 cents, or 2.3 per cent, to US$40.33 in late-morning trade.

Argus Research analyst Bill Selesky said the company's outlook was somewhat cautious.

"They don't see demand picking up too much going forward, but ... the good thing is they think operating rates are going to get a little bit better."

- AP