California Steel Industries, Inc. reported a net loss of $1.1 million on net sales of $287.7 million for the quarter ended September 30, 2005.

The $1.1 million net loss compares to third quarter 2004 net income of $46.1 million. The loss is attributed primarily to lower sales prices, decreased shipments, higher slab consumption costs and higher energy costs.

Net sales of $287.7 million represent a 26% decrease compared to net sales of $390.3 million in the third quarter of 2004. Net tons shipped decreased 18% and average sales prices decreased 11% compared to third quarter 2004, while average slab consumption costs increased 16%. Net sales were 6% lower than second quarter 2005, reflecting sales prices that were almost 13% lower and a 7% increase in net tons shipped.

Prices for electricity and natural gas ran 16% and 34% higher, respectively, over third quarter 2004. Although electricity rates typically run slightly higher during the summer months, prices in third quarter 2005 rose 48% over second quarter 2005, while natural gas was up 8%.

EBITDA was $6.7 million, which compares with 2004's third quarter results of $87.1 million, and $26.1 million in second quarter 2005.

"Third quarter, usually our busiest time of year, was a difficult one for the steel industry. Lower sales volume and falling prices reflect a market that we believe reached its low point during this challenging year," said Masakazu Kurushima, President and CEO. "However, demand for our products, as well as sales prices, has increased, and we believe that fourth quarter financial results will improve," he continued.

The balance under the company's revolving credit agreement was zero as of September 30, 2005, with availability of $108.0 million and a cash balance of $33.5 million. During third quarter 2005, California Steel made its semi-annual bond interest payment of $4.6 million, and paid dividends to its shareholders of $15.9 million, representing the payment due from first semester 2005 net income. Additional cash outlay of $19.4 million was made as the company exercised an early buyout option of a lease held on the equipment of its No. 2 Continuous Galvanizing Line.

California Steel Industries is the leading producer of flat rolled steel products in the western United States (the 11 states located west of the Rocky Mountains) based on tonnage billed, with a broad range of products, including hot rolled, cold rolled, electric resistant weld pipe and galvanized coil and sheet. Located in Fontana, Calif., California Steel has about 1,000 employees.