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Released May 17, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. steelmakers in general reported high earnings in the first quarter of this year, driven by high demand and low inventories. Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina) reported first-quarter net earnings of $942.4 million, the most profitable quarter in the company's history, compared with $20.3 million in the first quarter of 2020. In a press release, Chief Executive Officer Leon Topalian said, "We expect earnings for the second quarter of 2021 to exceed our first-quarter results, setting a new record for quarterly earnings." In addition, if President Joe Biden's $2.25 trillion bill to strengthen U.S. infrastructure makes it through Congress, the good times could keep coming for steel manufacturers.
Nucor is seizing these opportunities, with approximately $2 billion in planned capital spending this year. During the company's most recent earnings conference call, Chief Financial Officer James Frias said, "Approximately 80% of the 2021 capital spending is for improved product capabilities and cost-savings projects. About half of the anticipated total 2021 capital spending is for our three remaining major projects: the expansion and modernization of the Gallatin, Kentucky, sheet mill, the Generation-3 flexible galvanizing line at the Hickman, Arkansas, sheet mill, and the greenfield Brandenburg, Kentucky, plate mill." Nucor also last week announced that its board of directors had approved the repurchase of up to $3 billion of the company's common stock.
Click on the image at right for a breakdown by market region of Nucor's active U.S. projects.
Among the major projects outlined by Frias, the grassroot plate mill in Brandenburg, is by far the largest investment. Last summer, the project was paused due to the COVID-19 pandemic, but finally kicked off at a later-than-anticipated date in the fourth quarter. Topalian said the project may be in a prime position to take advantage of new market opportunities. "We see Brandenburg's commissioning time frame, which is scheduled for startup in late 2022, is ideally suited to serve the offshore wind market," he said. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Database can click here to see the project report.
Last week, the Biden administration, gave the green light to a major wind installation off the Massachusetts coast, and has given encouraging signs to Dominion Energy's (NYSE:D) (Richmond, Virginia) massive 2.6-gigawatt project off the Virginia coast. For more information, see May 13, 2021, article - Avangrid Eyes Ambitious Renewables Buildout, Nabs Key Offshore Wind Approval and May 6, 2021, article - Dominion Goes Full Tilt on Renewables in $32 Billion Capital Spending Program. Topalian said, "The Biden administration has set a goal of deploying 30,000 megawatts of offshore wind power by 2030. This could require as much as 8 million tons of steel."
Construction on the galvanizing line addition at the mill in Hickman, Arkansas, kicked in 2019 and is expected to be completed in the third quarter of this year, ramping up to full production soon thereafter. For more information, click here for Industrial Info's project report.
The company's Gallatin, Kentucky, sheet mill is underway with a couple of upgrades and improvements, including an expansion/addition project to increase production capacity to 3 million tons per year and a new electric arc furnace. For more information, click here to view these projects.
One of Nucor's end-customers that recently has suffered is the automotive sector, where a lack of semiconductors and severe weather has curtailed production. Topalian said about 16 million vehicles were expected to be produced this year. "We expect the difficulties to continue into the third quarter. Even with these disruptions, our mills have been running full out to satisfy customer requirements from the auto sector."
Among the reasons Nucor had such a strong quarter and is expecting even better results this quarter were two projects that completed commissioning, ramped up production and begin turning a profit late in the first quarter. The company's merchant bar rolling mill in Kankakee, Illinois, completed equipment commissioning in December and product trials in February, and began seeing positive cash flows in March. For more information, click here to see Industrial Info's project report.
A grassroot steel rebar micromill was completed in December in Frostproof, Florida, and also began turning a profit in March. The mill can produce up to 350,000 tons per year of steel rebar. Click here to see Industrial Info's project report.
Earlier this month, Nucor announced that it would perform upgrades to its engineered ball mill in Nebraska. For more information, see Industrial Info's project report.
High steel prices and the record profits U.S. steel companies are seeing are leading some to question if the U.S. steel market is in a bubble. Bank of America analyst Timna Tanners told CNN Business, "This is going to be short-lived. It's very appropriate to call this a bubble." Steelmakers suffered at the start of the pandemic, when orders dried up, and they began idling capacity. Many were slow to restart once the market improved. With the fairly rapid reopening of the economy, the orders started pouring in, boosting prices and depleting inventories. Another hindrance in U.S. steelmakers' profits could be if President Joe Biden rolls back former President Donald Trump's protectionist steel tariffs, opening up domestic steel producers to increased international competition. Tanners thinks that is likely to happen in the next 12 months. "We are protecting an industry where there is scarcity and prices are almost triple historical averages," she said.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
Nucor is seizing these opportunities, with approximately $2 billion in planned capital spending this year. During the company's most recent earnings conference call, Chief Financial Officer James Frias said, "Approximately 80% of the 2021 capital spending is for improved product capabilities and cost-savings projects. About half of the anticipated total 2021 capital spending is for our three remaining major projects: the expansion and modernization of the Gallatin, Kentucky, sheet mill, the Generation-3 flexible galvanizing line at the Hickman, Arkansas, sheet mill, and the greenfield Brandenburg, Kentucky, plate mill." Nucor also last week announced that its board of directors had approved the repurchase of up to $3 billion of the company's common stock.
Click on the image at right for a breakdown by market region of Nucor's active U.S. projects.Among the major projects outlined by Frias, the grassroot plate mill in Brandenburg, is by far the largest investment. Last summer, the project was paused due to the COVID-19 pandemic, but finally kicked off at a later-than-anticipated date in the fourth quarter. Topalian said the project may be in a prime position to take advantage of new market opportunities. "We see Brandenburg's commissioning time frame, which is scheduled for startup in late 2022, is ideally suited to serve the offshore wind market," he said. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Database can click here to see the project report.
Last week, the Biden administration, gave the green light to a major wind installation off the Massachusetts coast, and has given encouraging signs to Dominion Energy's (NYSE:D) (Richmond, Virginia) massive 2.6-gigawatt project off the Virginia coast. For more information, see May 13, 2021, article - Avangrid Eyes Ambitious Renewables Buildout, Nabs Key Offshore Wind Approval and May 6, 2021, article - Dominion Goes Full Tilt on Renewables in $32 Billion Capital Spending Program. Topalian said, "The Biden administration has set a goal of deploying 30,000 megawatts of offshore wind power by 2030. This could require as much as 8 million tons of steel."
Construction on the galvanizing line addition at the mill in Hickman, Arkansas, kicked in 2019 and is expected to be completed in the third quarter of this year, ramping up to full production soon thereafter. For more information, click here for Industrial Info's project report.
The company's Gallatin, Kentucky, sheet mill is underway with a couple of upgrades and improvements, including an expansion/addition project to increase production capacity to 3 million tons per year and a new electric arc furnace. For more information, click here to view these projects.
One of Nucor's end-customers that recently has suffered is the automotive sector, where a lack of semiconductors and severe weather has curtailed production. Topalian said about 16 million vehicles were expected to be produced this year. "We expect the difficulties to continue into the third quarter. Even with these disruptions, our mills have been running full out to satisfy customer requirements from the auto sector."
Among the reasons Nucor had such a strong quarter and is expecting even better results this quarter were two projects that completed commissioning, ramped up production and begin turning a profit late in the first quarter. The company's merchant bar rolling mill in Kankakee, Illinois, completed equipment commissioning in December and product trials in February, and began seeing positive cash flows in March. For more information, click here to see Industrial Info's project report.
A grassroot steel rebar micromill was completed in December in Frostproof, Florida, and also began turning a profit in March. The mill can produce up to 350,000 tons per year of steel rebar. Click here to see Industrial Info's project report.
Earlier this month, Nucor announced that it would perform upgrades to its engineered ball mill in Nebraska. For more information, see Industrial Info's project report.
High steel prices and the record profits U.S. steel companies are seeing are leading some to question if the U.S. steel market is in a bubble. Bank of America analyst Timna Tanners told CNN Business, "This is going to be short-lived. It's very appropriate to call this a bubble." Steelmakers suffered at the start of the pandemic, when orders dried up, and they began idling capacity. Many were slow to restart once the market improved. With the fairly rapid reopening of the economy, the orders started pouring in, boosting prices and depleting inventories. Another hindrance in U.S. steelmakers' profits could be if President Joe Biden rolls back former President Donald Trump's protectionist steel tariffs, opening up domestic steel producers to increased international competition. Tanners thinks that is likely to happen in the next 12 months. "We are protecting an industry where there is scarcity and prices are almost triple historical averages," she said.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
