United States Steel's (X  ) stock has been stuck in a bear market since March 2018 when it topped around $46. Since then, it's lost more than 80%. The company's struggles continue primarily due to falling steel prices. And its struggles are compounded as the company had been investing in increasing production as it was anticipating rising steel prices due to President Trump's tariffs and promises to boost the domestic steel industry.

Last year, the company lost $642 million which is particularly noteworthy given that the company's market cap is currently $1.6 billion. This followed a strong 2018 in which the company made $957 million which was boosted by President Donald Trump's 25% tariffs on imported steel. Ironically, U.S. Steel topped just around the time, tariffs were implemented.

However, U.S. Steel's tough 2019 showed that tariffs are ineffective in dealing with problems caused by insufficient demand. Steel prices were around $800 a ton when U.S. Steel's stock was above $40. Currently, it's closer to $500 per ton. The company's woes are exacerbated as it's been downgraded by credit rating agencies to "junk debt" which will lead to higher borrowing costs.

The company has been aggressively cutting costs as it's fighting for survival and in its latest move, the company reduced headcount for the third time. It's looking to cut costs by $200 million by lowering headcount, reducing production, and shuttering particular locations.

Looking Ahead

U.S. Steel's stock was 8% higher following its latest earnings release, as the company believed that it was past its "trough for the year". While management is bullish on 2020, the stock market is not as these gains were quickly given back. There doesn't seem to be an immediate catalyst to reverse the company's fortunes.

A few months back, it would have been reasonable to think that the global industrial slowdown since late-2018 may turnaround as inventories were replenished especially with the temporary truce in the trade war and passage of "phase 1" of the trade deal. Even if this is still going to happen, it's not likely to happen anytime soon. The coronavirus outbreak is going to delay any sort of manufacturing bounce-back.

U.S. Steel is in a race against the clock. Its survival is at stake unless steel prices can sustainably rebound. The odds of this happening in the next three months are much less with the reduction in global manufacturing and economic activity due to this outbreak.