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Released July 21, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The potential of tariffs or other measures to stem the flood of foreign steel into the United States was a big topic during Steel Dynamics' (NASDAQ:STLD) (Fort Wayne, Indiana) second-quarter earnings conference call presentation on Thursday. U.S. Department of Commerce Secretary Wilbur Ross is soon expected to present findings and recommendations regarding steel imports and their impact on national security. President Donald Trump has indicated he hasn't ruled out import tariffs or quotas.
The Department of Commerce is studying the impact of steel and aluminum imports on national security. China is largely held to blame for the tide of steel imports. U.S. and Chinese officials held economic talks Wednesday that were characterized in news reports as "contentious."
Steel Dynamics is the fourth largest producer of carbon steel products in the U.S. In addition to processing scrap metal, the company is one of the largest galvanized sheet metal producers in the U.S. and the leading rail producer. Industrial Info is tracking $208.5 million in project activity by Steel Dynamics.
During the earnings presentation, Steel Dynamics Chief Executive Officer Mark Millet said that he and other U.S. steel industry leaders were working with the Commerce Department on the issue. He said he anticipates that Ross "will take a very strong approach in his recommendations to the president," adding: "I think they want to present a case that will ultimately be successful in gaining support up on the Hill [Congress]."
In his testimony to the Commerce Department in May, Millet said Steel Dynamics produced 9.3 million tons of steel in 2016, but it had an annual capacity of 11 million tons. The underutilization was a direct result of imported steel, he said.
In May, Millet said that the problem was the "irresponsible action of sovereign states." He noted that 70% of global steel capacity is in the hands of sovereign states, versus private entities.
U.S. steel producers have been successful getting countervailing duties placed on Chinese corrosion-resistant sheet metal and cold-rolled sheet metal, Millet said, only to see imports from other countries rise.
"We are playing a game of whack-a-mole," Millet said in May. "We hit the Chinese with duties and the Chinese steel goes to 10 other counties to become cold-rolled steel, corrosion resistant sheet, steel or pipe [imports]."
While U.S. steel producers are urging the Trump administration to take action against imports, other industries, including oil and gas producers, who use a lot of foreign-made piping, are urging caution. The American Petroleum Institute (API) and other energy-related groups have asked the Department of Commerce to define "national security" narrowly so as to exclude steel supplied to the U.S. oil and natural gas industry.
Steel Dynamics on Thursday reported second-quarter 2017 net income of $154 million, with net sales of $2.4 billion, compared with prior year second-quarter net income of $142 million, and net sales of $2.0 billion.
The company reported two operational cost items for second-quarter 2017, including the modernization of one of its galvanizing lines at its Butler flat roll operations in Indiana, while also expanding the line's annual value-added production capacity by 180,000 tons per year. The upgrade required the line to be down for three weeks in May. For more on the $15 million upgrade, see Industrial Info's project report.
Also, Steel Dynamics said it experienced quality issues related to the start-up of a new Galvalume and paint line at its Columbus, Mississippi, flat roll operations, resulting in line downtime. For more on the $100 million paint line project, see Industrial Info's project report.
Combined, the Butler and Columbus items resulted in higher costs and lower value-added shipments, reducing potential second quarter 2017 pretax earnings by an estimated $30 million, the company said.
Company executives said during the earnings conference call that capital expenditures for this year are expected to be $200 million, and capital expenditures for 2018 are expected to be about $250 million.
Nucor Reports Drop in Second-Quarter Earnings
Also on Thursday, Charlotte, North Carolina-based steel producer Nucor Corporation (NYSE:NUE) announced net earnings of $323 million for the just-ended quarter, down from of $243.6 million in second-quarter 2016. Sales amounted to $5.17 billion in second-quarter 2017, up 22% compared with $4.25 billion in second-quarter 2016.
Nucor also said that imports continue to plague the domestic industry. Through the first half of 2017, finished steel imports increased by an estimated 15% compared with the same period last year and accounted for an estimated 27% share of the U.S. market, the company said.
In May, Nucor announced plans to build a hot band galvanizing and pickling line at its sheet mill in Ghent, Kentucky. The new galvanizing line will have an annual capacity of 500,000 tons. It is expected to take two years to construct the galvanizing line and begin operations. For more information on the $176 million project, see Industrial Info's project report.
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/.
The Department of Commerce is studying the impact of steel and aluminum imports on national security. China is largely held to blame for the tide of steel imports. U.S. and Chinese officials held economic talks Wednesday that were characterized in news reports as "contentious."
Steel Dynamics is the fourth largest producer of carbon steel products in the U.S. In addition to processing scrap metal, the company is one of the largest galvanized sheet metal producers in the U.S. and the leading rail producer. Industrial Info is tracking $208.5 million in project activity by Steel Dynamics.
During the earnings presentation, Steel Dynamics Chief Executive Officer Mark Millet said that he and other U.S. steel industry leaders were working with the Commerce Department on the issue. He said he anticipates that Ross "will take a very strong approach in his recommendations to the president," adding: "I think they want to present a case that will ultimately be successful in gaining support up on the Hill [Congress]."
In his testimony to the Commerce Department in May, Millet said Steel Dynamics produced 9.3 million tons of steel in 2016, but it had an annual capacity of 11 million tons. The underutilization was a direct result of imported steel, he said.
In May, Millet said that the problem was the "irresponsible action of sovereign states." He noted that 70% of global steel capacity is in the hands of sovereign states, versus private entities.
U.S. steel producers have been successful getting countervailing duties placed on Chinese corrosion-resistant sheet metal and cold-rolled sheet metal, Millet said, only to see imports from other countries rise.
"We are playing a game of whack-a-mole," Millet said in May. "We hit the Chinese with duties and the Chinese steel goes to 10 other counties to become cold-rolled steel, corrosion resistant sheet, steel or pipe [imports]."
While U.S. steel producers are urging the Trump administration to take action against imports, other industries, including oil and gas producers, who use a lot of foreign-made piping, are urging caution. The American Petroleum Institute (API) and other energy-related groups have asked the Department of Commerce to define "national security" narrowly so as to exclude steel supplied to the U.S. oil and natural gas industry.
Steel Dynamics on Thursday reported second-quarter 2017 net income of $154 million, with net sales of $2.4 billion, compared with prior year second-quarter net income of $142 million, and net sales of $2.0 billion.
The company reported two operational cost items for second-quarter 2017, including the modernization of one of its galvanizing lines at its Butler flat roll operations in Indiana, while also expanding the line's annual value-added production capacity by 180,000 tons per year. The upgrade required the line to be down for three weeks in May. For more on the $15 million upgrade, see Industrial Info's project report.
Also, Steel Dynamics said it experienced quality issues related to the start-up of a new Galvalume and paint line at its Columbus, Mississippi, flat roll operations, resulting in line downtime. For more on the $100 million paint line project, see Industrial Info's project report.
Combined, the Butler and Columbus items resulted in higher costs and lower value-added shipments, reducing potential second quarter 2017 pretax earnings by an estimated $30 million, the company said.
Company executives said during the earnings conference call that capital expenditures for this year are expected to be $200 million, and capital expenditures for 2018 are expected to be about $250 million.
Nucor Reports Drop in Second-Quarter Earnings
Also on Thursday, Charlotte, North Carolina-based steel producer Nucor Corporation (NYSE:NUE) announced net earnings of $323 million for the just-ended quarter, down from of $243.6 million in second-quarter 2016. Sales amounted to $5.17 billion in second-quarter 2017, up 22% compared with $4.25 billion in second-quarter 2016.
Nucor also said that imports continue to plague the domestic industry. Through the first half of 2017, finished steel imports increased by an estimated 15% compared with the same period last year and accounted for an estimated 27% share of the U.S. market, the company said.
In May, Nucor announced plans to build a hot band galvanizing and pickling line at its sheet mill in Ghent, Kentucky. The new galvanizing line will have an annual capacity of 500,000 tons. It is expected to take two years to construct the galvanizing line and begin operations. For more information on the $176 million project, see Industrial Info's project report.
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/.
