Nucor Proceeding With Expansions, New Mills Despite Lower Prices

“While we recognize there is considerable economic uncertainty right now, demand appears stable and resilient across our key end-use markets,” chief financial officer Stephen Laxton said during a conference call with analysts on Thursday, July 21. But, he added, “Prices in the steel segment have softened due to import pressure coupled with overall commodity pricing declines globally.”

Nucor president and CEO Leon Topalian echoed that sentiment, calling out “unfairly traded imports” and stressing the need to maintain anti-dumping and countervailing duty orders in ongoing sunset review cases. “Nucor is working hard to make sure that they all remain in place,” he said.

The US has maintained most duties on imported hot-rolled coil and cold-rolled coil. But Brazil was let off the duty hook in a recent decision regarding cold-rolled imports. Other sunset review cases are still pending.

As for other policy matters—namely infrastructure spending—it will be about six months until the Charlotte, N.C.-based steelmaker sees that demand. “Right now, there is a lot of dialogue going on. But we’re not seeing any real movement in terms of material orders,” Topalian said. “We really think that will start in earnest in early 2023 and will really progress throughout the year.”

Nucor in the meantime expects lower earnings from its steel mill segment in the third quarter compared to the second. Performance from its upstream raw materials and downstream steel products should be similar to the record Q2 performance, company executives said.

Operations Update

On the operations side, Nucor hopes to strike an arc at its new, $1.35 billion plate mill in Brandenburg, Ky., “literally in the next day or two,” said Al Behr, executive vice president of plate and structural products. The rest of the mill, which will sport capacity of 1.2 million tons per year, remains on track to start up by the end of the year.

Nucor sees opportunity for the mill not only from infrastructure demand but also when it comes to offshore wind towers and specialty pipe products. “It’s very exciting. We stand as the only mill in North America, the only mill in the Western Hemisphere, that can serve that market, which is currently served by foreign steel, mostly blast furnace steel,” Behr said. “This will be the cleanest offshore power steel that exists it the world.”

Behr also addressed plate prices, which have been remarkably stable compared to the massive volatility in sheet markets. Changes in how Nucor markets plate and loads its order books have resulted in more “rationality” in plate prices and less volatility. “We publish a price, but the market determines what it really is—and it tell us it’s quite strong,” he said.

On the sheet side, work on Nucor’s new $2.7 billion sheet mill in Mason County, W.Va., is proceeding. All steelmaking equipment has been purchased, and contracts have been awarded for a significant portion of the concrete work, said Rex Query, executive vice president of sheet and tubular products. That facility is expected to add 3 million tons per year of sheet capacity when it is started in 2024.

And Nucor in June completed a planned outage at its Gallatin steel mill in Kentucky. The outage was related to an expansion that will boost the mill’s capacity from 1.6 million tons per year to 3 million tons per year. The company has also expanded the width of the slabs produced at Gallatin from 68 inches to 73.5 inches.

Gallatin will ramp up over the course of the third quarter and should be capable of running at its nameplate capacity of 3 million tons per year in the fourth quarter. But the run rate will be determined not by what the mill can do. “We’ll gauge that by the demand in the marketplace,” Query said.

As for raw materials, Nucor has reduced its consumption of pig iron by about 50% compared to year-ago levels. The company expects pig iron prices to level off in the third quarter and then decline in the fourth, said Doug Jellison, executive vice president of raw materials.

By Michael Cowden, Michael@SteelMarketUpdate.com