Steel Dynamics, Nucor Rail Against Steel Imports as Earnings Decline

Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. steel manufacturers Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) and Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) say that not enough is being done in a timely fashion to curb steel imports into the U.S., ultimately hurting both companies' bottom lines. While recent trade cases have come out in favor of curbing illegal imports, stockpiling and a slow process in deciding pending cases continue to weigh on the companies. Both companies reported net earnings for the third quarter of 2017 on Thursday that were less than the corresponding quarter of 2016.

In a press release accompanying Steel Dynamics' third-quarter results, Chief Executive Officer Mark Millett said, "Elevated levels of steel imports persisted during the quarter, hindering the ability for domestic steel prices to keep pace with raw material costs. Despite reported low levels of steel service center inventory, we believe steel traders built inventory at the ports ahead of potential domestic trade actions, which resulted in an overhang position for flat roll steel during recent months. This oversupply resulted in periods of weaker customer orders."

In Nucor's conference call, Chief Executive Officer John Ferriola said, "2017 has seen a renewed surge of illegally traded imports into the U.S. Through the first nine months of 2017, finished still imports have increased an estimated 15% compared to the same period last year. The year-to-date market share for finished steel imports stands at approximately 27%. Nucor continues to believe significant work remains to be done to achieve free and fair trade for U.S. manufacturers. More specifically, it is time for comprehensive and broad-based remedies that address illegal foreign trade practices that have materially weakened our nation's economic vitality."

Speaking of Steel Dynamics' recently completed projects, in a conference call Millett said, "We continue to ramp up production at the new $100 million paint line at our Columbus [Mississippi] flat-rolled division, which initiated prime shipments in the first quarter of this year. The new line provides 250,000 tons of annual coating capability and further diversification into some of our highest margin products. ... We anticipate the new paint line to be running close to full capacity by mid-year 2018." Construction on the continuous coil paint line began in early in 2016. Phillips Contracting Company Incorporated (Columbus) acted as a contractor on the project. For more information, see Industrial Info's project report.

Among Steel Dynamics other projects is the construction of a steel minimill in Columbia City, Indiana, which began this summer. The company will use 450,000 to 500,000 tons worth of excess melting and casting capacity to boost structural and rail capabilities by constructing additional buildings with support equipment. Construction of the $75 million project is expected to be wrapped up in the third quarter of next year. Vision IV Construction LLC (Fort Wayne, Indiana) is acting as general contractor on the project. For more information, see Industrial Info's project report.

Among Nucor's key projects scheduled to begin construction soon is the steel sheet cold rolling mill complex in Hickman, Arkansas. Construction of the 500,000-ton-per-year sheet rolling mill is scheduled to kick off in the near future and be completed in the second half of 2018. The project will allow Nucor to expand its capability to produce advanced high-strength, high-strength low-alloy and motor lamination steel products. Systems Contracting Corporation (Blytheville, Arkansas) is the project contractor. For more information, see Industrial Info's project report.

Also under construction is a grassroot steel sheet galvanizing plant in Nuevo Leon, Mexico. Nucor kicked off construction in the first quarter of this year, and it is planned for completion in early 2020. The facility will produce 400,000 tons per year of steel galvanized sheets and has an estimated total investment value of $270 million. For more information, see Industrial Info's project report.

Steel Dynamics reported third-quarter 2017 net income of $151 million, compared with $154.4 million in third-quarter 2016. Nucor reported net income of $390.9 million in the just-passed quarter, compared with $484.2 million in third-quarter 2016.

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