Why United States Steel Corporation Investors Should Be Wary of the Lack of Business Investment
Like all steel makers, United States Steel Corporation (NYSE: X) worked hard to survive the steel downturn. A key focus was cutting costs, but that appears to have happened at the expense of reinvesting in the business. Now that the steel industry is starting to see better days, U.S. Steel is going to have to make up for that decision by spending money and time on upgrading its assets. That could be a notable drag on results.
The steel industry downturn really started after the 2007 to 2009 recession. It was so bad that industry leader Nucor Corp (NYSE: NUE) lost money in 2009, the first (and only) time it had lost money in its history as a steel company. The downturn lingered for years, too, exacerbated by a global oversupply and imports that many industry participants argue were being unfairly priced. The downturn has only begun to let up recently.
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Source: Fool.com