Calling 2021 “the safest and most profitable year in the company’s history,” Nucor executives sounded “a consistent drumbeat on demand” in their outlook for 2022 during their fourth-quarter conference call with analysts and investors today.
The Charlotte, N.C.-based steelmaker posted record earnings of $6.83 billion in 2021 on sales of $36.5 billion. Sixteen of its divisions had zero recordable injuries last year. “By so many measures, 2021 was an extraordinary year for Nucor,” President and CEO Leon Topalian said.
Nucor has invested billions in new plants and equipment in the past several years, some of which will soon bear fruit. Topalian pointed to the new sheet mill the company announced earlier this month in Mason County, W.Va., which is expected to have capacity of three million tons per year (tpy). “Once operational, the mill will have among the most advanced capabilities and the lowest carbon footprint of any sheet mill,” he said.
Last month, Nucor’s Hickman, Ark., sheet mill produced the first prime coil on its new Generation 3 flexible galvanizing line. “The new galv line combined with Hickman’s specialty cold rolling mill uniquely positions the company among North America’s EAF steelmakers to provide the high-strength lightweight steel increasingly in demand,” Topalian said.
The modernization and expansion of Nucor Gallatin is starting up this quarter, giving the Ghent, Ky., sheet mill thicker slab casting and wider coil capabilities. Gallatin will have the capacity to add an incremental 800,000-900,000 tpy to the market. But company execs said they plan to ramp the expanded mill up slowly once it is completed in March and to do so in line with market demand.
Nucor also expanded its presence on the West Coast with the purchase of a majority interest in California Steel Industries, a slab converter with two million tons of annual capacity. The deal, expected to close shortly, will enable the company to more efficiently supply its downstream businesses in the region, including Verco Manufacturing and Hannibal Industries.
In the plate market, Nucor’s Brandenburg, Ky., mill – now under construction – is on track to roll its first plate in this year’s fourth quarter. Capable of manufacturing nearly all the different types of plate consumed in the U.S., the mill will serve customers in the offshore wind, heavy equipment, construction and military markets, the company said.
Nucor is also planning to construct a new 430,000-tpyrebar micromill somewhere in the Southeast this year. That will be the company’s third micromill.
Nucor forecasts that returns from its sheet mill segment will moderate a bit this year from their record highs in light of declining flat rolled prices. But management considers this a short-term inflection in price and volumes, mostly due to imports. “The outlook and demand picture across every end market that Nucor serves remains very robust. We believe this is going to work through the inventory rebalancing and position us well as we move forward,” Topalian said.
Company executives also noted there’s a boost in demand still to come in new construction from the federal infrastructure bill and from automotive production once the microchip shortage is resolved.
On the green front, Nucor shipped its first Econiq coil this month under a contract with automaker General Motors. The company says Econiq represents the world’s first “net zero” carbon steel available at scale. “The demand picture for green steel is changing literally day to day. It’s not just the major OEMs in automotive that are asking for it. Many of our end customers cannot achieve their own carbon reduction targets without using steel [with a lower carbon footprint],” Topalian said.
“We believe we are seeing an acceleration in the transformation of our industry that has been underway for decades, with forces driving economic efficiency and lower emissions in the steel industry,” he added. “We are proud that Nucor has helped make the United States the cleanest place in the world to make steel. The green economy is being built on steel, and the steel it is built on matters.”
By Tim Triplett, Tim@SteelMarketUpdate.com
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