U.S. Steel Corp. (X), the country’s largest producer of the metal by volume, reported first-quarter earnings that exceeded analysts’ estimates after falling natural-gas prices lowered costs at blast furnaces.

Excluding a loss on the sale of a Serbian plant and other items, profit was 67 cents a share, the Pittsburgh-based company said today in a statement. That beat the 49-cent average of 15 estimates compiled by Bloomberg. The net loss widened to $219 million, or $1.52 a share, compared with $86 million, or 60 cents, a year earlier.

Net sales gained 6.3 percent to $5.17 billion from $4.86 billion, beating the $4.96 billion average of 12 estimates.

Gas prices in the U.S. have tumbled in the past year as improved drilling technology helped increase output from shale formations and the fourth-warmest U.S. winter reduced demand. The average price of gas on the New York Mercantile Exchange fell 40 percent in the quarter to $2.50 per million British thermal units.

“We’re using as much as we can within the limits we think are safe,” Chief Executive Officer John Surma said on a conference call with analysts.

U.S. Steel’s increased gas consumption is “a double-edged positive,” Mark Parr, an analyst at KeyBanc Capital Markets in Cleveland, who has a hold rating on the company and estimated per-share earnings of 48 cents, said in a telephone interview yesterday.

Flat-Rolled Business
U.S. Steel fell 2 percent to close at $27.65 in New York. The shares have dropped 47 percent in the past year, the worst performer on the Standard and Poor’s 500 Materials Index.

Second-quarter results for U.S. Steel’s flat-rolled unit, its largest by revenue, will decline because of higher maintenance costs, Surma said in the statement. Shipments of tubular goods used by oil and gas drillers will be “slightly” below the record 529,000 tons recorded in the first quarter, the company said.

“The second quarter should be the best quarter, volume- wise,” Aldo Mazzaferro, an analyst with Macquarie Capital USA Inc. in New York who recommends selling the shares, said today in a telephone interview. “Why is steel demand suddenly kind of sluggish in what should be a seasonally better quarter? It’s a little concerning.”

Production Capacity
The company said it used 83 percent of its capacity to make flat-rolled steel in the first quarter, up from 77 percent a year earlier. U.S. steelmakers used 78 percent of their capacity on average in January through March, up from 74 percent a year earlier and the highest level since the third quarter of 2008, according to American Iron and Steel Institute data.

U.S. Steel may use 125 million British thermal units of gas this year, Surma said Jan. 31. The company injects the fuel into its blast furnaces, replacing some of the coke it uses. U.S. Steel may replace as much as 100 pounds of coke with gas for each ton of steel it makes compared with its 2010 coke use, Surma said in January.

AK Steel Holding Corp. (AKS), a West Chester, Ohio-based steelmaker, reported today a first-quarter net loss of 11 cents a share compared with net income of 8 cents a year earlier. That beat the average of 16 analysts’ estimates compiled by Bloomberg for a loss of 12 cents. The company said it expects to be profitable in the current quarter.