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What: United States Steel Corporation (NYSE:X) watched its stock decline 36% in September, capping a year-long decline of around 60%.

So What: The U.S. steel industry has been dealing with an oversupply of the metal. The supply/demand imbalance isn't getting better as China's economy continues to slow. That's bad for pricing around the world, but has been an increasingly difficult problem for steel mills with a large U.S. presence. This is because Chinese steel has directly or indirectly been forcing low-priced steel into the United States. So steel prices are weak and domestic competition is fierce.

U.S. Steel has, thus, been feeling the pinch of this. And because many of its mills use blast furnaces, which are older and more expensive to run than the newer electric arc furnaces that some of its competitors use, its been bleeding red ink. So when three key industry competitors came out and talked about increasing imports pushing their third quarter earnings expectations lower, U.S. Steel, which didn't make such a call, was caught up in the downdraft.

Adding to the negatives is the fact that U.S. Steel is one of the largest domestic tubular goods makers. A key customer in this segment is the oil and gas industry, which has been suffering through a downturn of its own. So news of slowing U.S. oil drilling hasn't helped things, either.

Now what: High costs, low prices, increasing competition, and competitors warning that upcoming earnings will be disappointing... No wonder U.S. Steel's shares fell in September. But as the year-long slump suggests, this isn't a one or two quarter issue. U.S. Steel is facing a very difficult market and it's likely to take some time for all of these problems to work themselves out. If you are a contrarian you might find this company mired in the low point of the cyclical steel industry of interest. If that doesn't sound like you, you should probably avoid the entire steel sector right now.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.