U.S. Steelmakers Report Solid Results as Trump Launches Imports Probe

Researched by Industrial Info Resources (Sugar Land, Texas)--The future of U.S. steel manufacturers looked sunnier on Thursday as President Donald Trump ordered an investigation into whether imports of foreign steel pose a risk to national security. Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) and Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana), each reported solid first-quarter 2017 earnings on Thursday. Industrial Info is tracking $846.8 million in projects involving Nucor and $168.5 million in projects involving Steel Dynamics.

Trump said he had directed the Department of Commerce to prioritize the probe.

"This investigation will look at how steel imports are impacting the United States national security, taking into account foreign practices such as steel dumping," Trump said. "Dumping is a tremendous problem in this country. They're dumping vast amounts of steel in our country, and they're really hurting not only our country, but our companies. Their targeting of American industry and other foreign strategies [are] designed to undermine American industry as a whole."

He continued: "Maintaining the production of American steel is extremely important to our national security and our defense industrial base. Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries."

Thomas Gibson, president and chief executive officer of the American Iron and Steel Institute, applauded the action: "Times of crisis call for extraordinary measures. Massive global steel overcapacity has resulted in record levels of dumped and subsidized foreign steel coming into the U.S. and the loss of nearly 14,000 steel jobs. The administration launching this investigation is an impactful way to help address the serious threat posed by these unfair foreign trade practices, and we applaud this bold action."

United States Steel Corporation (NYSE:X) (Pittsburgh, Pennsylvania) and AK Steel Holding Corporation (NYSE:AKS) (West Chester, Ohio) also lauded the imports probe.

During Nucor's first-quarter earnings presentation, Chief Financial Officer Jim Frias, said: "While recent trade case decisions have begun to reduce the flood of dumped and subsidized products from foreign producers, imports continue to negatively impact the U.S. steel industry overall. Through the first quarter of this year, imports remained at a stubbornly high 25% share of the U.S. market. Certain countries continue to brazenly break and circumvent our nation's trade laws. While significant progress is being made, there is still a significant amount of work to be done."

However, Frias expressed optimism for the company's overall earnings scenario for 2017. "Earnings for the second quarter of 2017 are expected to increase compared to the first quarter. This further supports our previously expressed view that full-year 2017 profitability could significantly exceed the level for 2016."

Another Trump initiative that is intended to help U.S. Steelmakers is the "Buy America" policy, which seeks to make projects, such as pipelines, use steel made in the U.S.

Nucor and Steel Dynamics continue with capital projects to increase their earnings power as the U.S. steel market seems to improve.

"We're investing $15 million to increase annual galvanizing productivity by 180,000 tons at Butler [Indiana], further increasing the mill's value-added production capabilities," said Steel Dynamics Chief Executive Officer Mark Millet during the company's earnings presentation. The project began construction during the first quarter of this year and is expected to be completed this summer. The project will boost the plant's galvanizing capacity by 180,000 tons per year. For more information, see Industrial Info's project report.

Nucor also continues with capital investments. "For 2017, we estimate capital spending of approximately $550 million," said Nucor's Frias during the company's earnings conference call.

Among the top Nucor projects being tracked by Industrial Info is a cold rolling mill addition at the company's existing sheet rolling mill in Blytheville, Arkansas. The project will add a 500,000-ton-per-year cold rolling mill complex to expand the facility's capability to produce advanced high-strength, high-strength low alloy and motor lamination steel products. The project is planned to kick off late in the third quarter of this year and will take about a year to complete. For more information, view Industrial Info's project report.

The company is also planning a $270 million grassroot steel sheet galvanizing plant in Nuevo Leon, Mexico. The plant would produce up to 400,000 tons per year of galvanized steel sheets. Construction is planned to kick off in early 2018 and be completed in the second half of 2019. For more information, see Industrial Info's project report.

Nucor reported net earnings of $356.9 million for the quarter, compared with $87.6 million in the same period of the previous year. Steel Dynamics reported first-quarter net income of $201 million, compared with $63 million in first-quarter 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.