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Why United States Steel Corporation's Stock Price Fell Nearly 16% in August

By Reuben Gregg Brewer - Sep 9, 2015 at 10:35AM

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The past few months have been volatile for U.S. Steel's shares, and August was no different, The future will probably bring more of the same.

What: United States Steel Corporation (NYSE: X) watched its stock price decline by a painful 16% in August, continuing the year-long downtrend that's seen the steel company's shares fall roughly 40%.

So what: U.S. Steel has been battling low steel prices and increasing low-priced imports for some time, and this year has been particularly rough. However, the stock bounced higher toward the end of July, a trend that carried into August. While investors may have started to believe the worst was past, it proved to be just a fleeting rally, as U.S. Steel's shares started to head lower again as August progressed.

The thing is, there really wasn't too much on the news front that's really positive. For example, the company announced plans to shut a furnace, continues to wrangle with unions, and announced that it would freeze a defined benefit pension plan. While these things may all help reduce operating expenses, the real issue to consider is why they're necessary. And the answer is that the steel industry continues to struggle, with U.S. Steel going along for the ride.

Now what: It was a bad month for U.S. Steel's stock overall, capping what has been a generally bad year. Nothing has changed on a fundamental level that should leave investors thinking that the worst has passed. Although the events surrounding the company may be exciting, U.S. Steel still has a lot of negatives stacked against it.

So investors should be careful, and that's particularly true with regard to a company like U.S. Steel, which has a lot of operations built on older steelmaking technology. It will take a pronounced upturn in steel prices for U.S. Steel to benefit along with some of its peers that are using more modern tech.

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