Steel Summit: Needham highlights Nucor's edge in flexibility, diversification

Tariffs

Since “Liberation Day” back in April, President Trump’s tariffs have been a hot topic in the steel industry. Backing up to why they exist in the first place, especially Section 232 tariffs, Needham looks at the “fundamentals.”

“Why are the tariffs here, and why do we see this focus from this administration and others?” he asked, answering: “I would say, it really goes back to the rest of the world plays by different rules. And those rules aren’t based on market fundamentals.”

He continued: “If we could have free trade, I’d love to have free trade, but it just doesn’t exist in the world today.”

As for Nucor’s strategy, Needham said: “There are a couple choices that I’ve found you can make in life. You can be the victim of circumstances, or you can do what you can to make the best of those circumstances.”

And the company has definitely chosen the latter.

For example, speaking of Nucor’s “metallics strategy,” he said the company has taken a course that’s “flexible for the long term.”

He said one of the first big steps was acquiring recycler David J. Joseph over 20 years ago.

“Since then, we’ve expanded into DRI capabilities,” he added, speaking about a facility in Trinidad and Tobago.

Another example, Nucor’s consumption of pig iron in its “raw material recipe” is half of what it was before the war in Ukraine started in 2022.

“And so when you think about conditions changing, like Brazil or DRI, we’re ready for those. We have a plan,” Needham said.   

Decarbonization

With all of the tariff news over the last few months, one topic seems to have fallen off people’s radar: decarbonization.

“A lot of people say with a switch in administration… decarbonization is dead,” Needham said. “I would tell you, it’s not.”

However, he’s seen an interesting transition over the last few years.

“Four years ago, when it was the biggest topic out there, a lot of people had excitement and energy around it, not necessarily focused on the cost,” Needham said. “Now everyone’s realizing to be sustainable for the future, you have to be sustainable cost-wise as well.”

For Nucor, though, they have always kept that in mind.

“We haven’t had to pivot around that, because that was our approach from day one,” commented Neeham. “We weren’t going to invest in any pie-in-the-sky technologies that we didn’t see being cost-effective at scale.”

Speaking of making things more concrete, he offered a more precise definition of “green steel” centering around carbon content.

“What’s the embodied carbon of the materials?” he said. “And today, we can tell you the embodied carbon of our grades of steel, and we can also tell you the cost associated to reduce that if you want, if that’s your interest.”

Overall, he called the decarbonization path a “longer-term” journey, “and that’s what we’ve been supporting for a number of years.”

CSP

A more recent development is Nucor establishing a consumer spot price (CSP) for hot-rolled coil. It’s been over a year since Nucor instituted its CSP, which is announced every Monday.

Needham was asked about the price in general. Additionally, someone asked if we could get a peek behind the curtain as to why the company raised it by $10 week over week on Aug. 25 to $875 per short ton (st). This marked the first uptick since the beginning of July.

“As we’ve stated from day one, CSP is an indicator where we see the markets going, and we see some positive things … on demand,” Needham said.

Regarding what goes into the secret sauce, Needham highlighted an advantage of being the “most diversified steel products manufacturer in North America”: enhanced market visibility with their downstream businesses.

He noted, “Their backlogs are good, and so that’s an indication, and that was a big reason for that increase.”

Needham added: “It had nothing to do with the derivative tariffs…. It was really around the visibility we see and demand going forward.”

Recall that earlier this month, over 400 derivative products were added to the list of Section 232 steel and aluminum tariffs.