Steel Mills
Nucor Guides to Lower Q4
Written by Sandy Williams
December 15, 2016
Nucor announced today that fourth quarter results are likely to be lower than third quarter due to lower margins in the steel mills segment, particularly at the company’s sheet mills, and seasonal slower activity.
The raw materials segment is also expected to decline significantly, returning to a loss position due to lower pricing at Nucor’s DRI facilities during fourth quarter.
Said Nucor in its guidance statement:
“Market conditions for the steel mills segment have been marked by volatility in sales prices and demand during 2016. Looking ahead to 2017, we are optimistic about continued improvement in market conditions. Prices have increased throughout the fourth quarter for our sheet, bar, structural and plate mills. Scrap and other commodities prices have been increasing as we approach the end of the year. Service center inventory levels remain low. We believe higher input costs and declining imports are now causing the market to find an improved and more sustainable level that we expect to benefit 2017.”
Key Banc analyst Phil Gibbs said Nucor’s guidance was weaker than expected. “While we expect to see some weakness in the stock given weaker than expected core FIFO results, we believe investors care little about calendar 4Q earnings, instead focusing on potential for spread improvement in 1H17 and long-term structural change potential for the U.S. steel industry under the new administration, including increased protectionism, increased oil & gas exploration, and potential for increased infrastructure spending over the next several years,” said Gibbs.
Sandy Williams
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