United States Steel Corporation to Write Down $1.8 Billion Worth of Assets This Quarter

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United States Steel Corporation to Write Down $1.8 Billion Worth of Assets This Quarter
United States Steel Corporation to Write Down $1.8 Billion Worth of Assets This Quarter

United States Steel Corporation to Write Down $1.8 Billion Worth of Assets This Quarter

The largest steel producer of the US, the United States Steel Corporation has announced that it will write down $1.8 billion worth of assets this quarter. However, the company assures investors that the non-cash write-down will not affect the company’s liquidity or compliance with debt covenants.

In a recently released announcement the company says that it is currently performing its annual goodwill impairment analysis. The press release from the United States Steel Corporation says that it estimates a total goodwill impairment of approximately $1.8 billion for its North American flat-rolled and Texas Operations reporting units in the third quarter of 2013.

The United States Steel Corporation adds that there is no tax benefit related to the impairment and the impairment charge will be reflected in its report on Form 10-Q for the third quarter of 2013. The company says that goodwill is quite essential, particularly for potential impairment and circumstances indicating its carrying value may not be recoverable.

Currently, the United States Steel Corporation has two reporting units that include nearly all of its goodwill; the first is, the North American flat-rolled segment and a portion of its Tubular segment called Texas Operations – it produces a significant portion of the company’s welded tubular products.

On the other hand, whereas it has Texas Operations which have reported $0.8 billion of goodwill, its North American flat-rolled reporting unit has $1 billion of goodwill. The company says source the impairment of the North American flat-rolled reporting unit’s goodwill is primarily driven by the valuation effects of the protracted economic recovery, excess global steelmaking capacity.

**relatedarticle**

Slow Steel Industry Sector

American Iron and Steel Institute’s (AISI) CEO Thomas Gibson recently said that more than quantitative easing, the government shutdown worried those in the domestic steel sector. Market observers believe that the solid third quarter is also masking what is still a weak steel market. Even ArcelorMittal is facing difficulty in slowed market.

In fact, ArcelorMittal, the industry’s largest player with an around 8% market share, has been faring poorly from the third quarter of last year. It recently increased the prices of steel and believes that the low point of the current cycle is past as it has a long way to go before it starts making money again.

Some market observers believe that the steel industry’s struggles aren’t surprising in light of the macroeconomic challenges which are marring the entire world.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com