Nucor Smashes Records in a Q3 More Profitable Than Most Years

Nucor posted net income of $2.13 billion in the third quarter, up 41% from $1.51 billion in the second quarter, and 11 times higher than the $193.4 million recorded in the third quarter of 2020.

“Congratulations to the entire Nucor team for delivering the phenomenal results we have seen so far this year while staying focused on our safety goals,” Nucor President and CEO Leon Topalian said in a statement.

The Numbers

Here’s one way to put Nucor’s third-quarter 2021 profits in perspective: The steelmaker posted annual earnings of $2.36 billion in 2018. And the latest quarterly result was just short of that full-year figure. Recall, too, that 2018 saw the highest steel prices since the frothy period before the 2008-09 financial crisis on the implementation of Section 232 tariffs and quotas.

Sales figures were also unprecedented. Nucor recorded net sales of $10.31 billion in the third quarter, up 17% from $8.79 billion in the second quarter and more than double sales of $4.93 billion in the third quarter of last year.

The big gains came thanks to a stellar showing from Nucor’s steel mills division, which recorded third-quarter earnings before income taxes of $3.11 billion – up more than 15-fold from $205.2 million in the year-ago quarter.

The immense profitability at the mill level resulted from expanding metal spreads – the difference between steel selling prices and raw materials costs.

Average steel selling prices were up 22% in the third quarter of 2021 compared to the second quarter and up 86% compared to the third quarter of last year. Average scrap and scrap substitute costs were $511 per ton in the third quarter, up 12% from $457 per ton in the second quarter and up 84% compared to the third quarter of 2020.

If there was a chink in Nucor’s third-quarter armor, it was that shipments were modestly lower. The steelmaker shipped 7.17 million tons to outside customers in the third quarter, down 4% from the second quarter.

The Outlook

The fourth quarter could set yet another quarterly profit record on “robust” demand in most end-use markets, a trend that is expected to continue into 2022, Nucor said.

The company is confident about that bullish demand forecast because of higher-than-usual backlogs at its steel mills and at its steel products division, a downstream operating segment.

Nucor also expects higher profits from its sheet and plate mills.

Sheet prices have moderated in recent weeks but remain elevated compared to historical levels. And plate prices continue to rise.

Hot-rolled coil prices stand at $1,910 per ton ($95.50 per cwt), down 2.3% from $1,955 per ton in early September but nearly triple $675 per ton a year ago, according to SMU’s interactive price tool.

Plate prices are at $1,800 per ton, up 3.4% from $1,740 per ton a month ago and 2.7 times higher than $660 per ton in October 2020.

Contracts are typically based on spot prices and lag spot prices by approximately a quarter – meaning that high spot prices will continue to flow through into contract deals in the fourth quarter of this year and the first quarter of next.

By Michael Cowden, Michael@SteelMarketUpdate.com