* U.S. Steel sees lower Q4 operating results
* AK Steel sees Q4 operating loss
* Shares slump despite Q3 earnings beats (Adds comments by U.S. Steel CEO, adds stock moves)
By Steve James
Oct 25 (Reuters) - U.S. Steel (X.N) and AK Steel (AKS.N) gave gloomy forecasts for the rest of the year, citing weak economies in Europe and North America, depressed steel prices and higher raw materials, and their shares plummeted.
U.S. Steel's Chief Executive Officer John Surma forecast lower fourth-quarter results, saying demand for steel was "just OK" with some strength in automotive, but nowhere near where it was before 2008.
"Underlying demand is pretty good but it hasn't caught up far enough to clear all this in a way that would make the kind of market we're looking for," Surma told analysts.
AK Steel, whose third-quarter results beat Wall Street estimates, declined to even forecast the fourth quarter. However, Chairman and CEO James Wainscott later told analysts the company expects an operating loss in the quarter.
"We anticipate lower average spot market selling prices and we expect higher operating costs," he said on a conference call. But "looking beyond the fourth quarter of 2011, we are optimistic for a variety of reasons.
"Eventually, market prices must align with a very high level of raw material cost."
He cited the slow but gradual economic recovery in the United States, continued improvement in overall automotive demand and specific auto sales gains for his optimism.
AK Steel shares dropped 13.6 percent to close at $7.47 and U.S. Steel shares were down 9.6 percent at $22.40 on Tuesday on the New York Stock Exchange.
Earlier, U.S. Steel reported better-than-expected third-quarter profit, but warned that fourth-quarter profit would weaken due to the soft economies in Europe and North America.
Analyst Michelle Applebaum of Steel Market Intelligence, said the company "could be going back into the red."
Mark Parr, of KeyBanc Capital Markets, said U.S. Steel's fourth-quarter outlook suggested EBITDA, or earnings before interest, taxes, depreciation and amortization, would be below Wall Street expectations.
"But we believe investors had not built much faith in fourth-quarter expectations given the recent declines in flat-rolled pricing realizations and choppy macro data," he wrote in a research note.
The gloomy assessments came after Nucor Corp (NUE.N), the largest U.S. steelmaker, last week forecast market deterioration for the rest of this year as demand is weak in some sectors and imports are driving down steel prices. [ID:nN1E79J0GN]
Although U.S. Steel turned a profit after a net loss in the year-ago quarter, overall results were down sharply from the second quarter of this year, with steel prices decreasing.
Surma said U.S. Steel's tubular business expected fourth-quarter results to be in line with the third quarter.
But "we expect to report lower operating results in the fourth quarter for our North American flat-rolled and European operations as a result of the slow and uneven economic recovery in those regions."
Surma said average prices and shipments are expected to decline through "cautious purchasing patterns created by the uncertain economic outlook and increasing domestic supply."
Net income in the third quarter was $22 million, or 15 cents per share, compared with a net loss of $51 million, or 35 cents per share, a year earlier, the Pittsburgh-based company said. Excluding one-time items, earnings per share were 72 cents, well above the 52 cents per share that analysts had forecast, according to Thomson Reuters I/B/E/S.
Sales rose 13 percent to $5.08 billion.
AK Steel posted a third-quarter net loss of $3.5 million, or 3 cents per share, compared with a loss of $59.2 million or 54 cents per share, for the 2010 quarter. But excluding expenses of about $6.2 million, or 5 cents per share, for repairs to an electric steelmaking furnace at its Butler Works, AK Steel reported an adjusted profit of 2 cents per share.
On that basis, it beat analysts' expectations for a loss of 1 cent per share, according to Thomson Reuters I/B/E/S.
The West Chester, Ohio-based steelmaker said sales for the third quarter were $1.585 billion, on shipments of 1,368,800 tons, compared with sales of $1.575 billion, on shipments of 1,465,800 tons for the year-ago third quarter.
AK Steel's average selling price was $1,158 per ton, a 2 percent decrease from the second quarter of 2011, but about 8 percent higher than for the third quarter of 2010. (Reporting by Steve James in New York, editing by Dave Zimmerman, Matthew Lewis, Gary Hill)