Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/4c67396fa55be6f848c0cec1beb6ed24.jpg)
Nucor Nearly Doubles Net Earnings in Q2
Written by Sandy Williams
July 19, 2018
Nucor’s consolidated net earnings in the second quarter of 2018 jumped to $683.2 million, the second highest quarterly earnings in the company’s history. In comparison, earnings were $354.2 million in the first quarter and $323 million in Q2 2017.
Nucor’s Chairman and CEO John Ferriola attributed the successful quarter to an upturn in the steel market. “We have increased our workforce by 18 percent and invested $8 billion since the last cyclical peak in 2008,” he said. “Now, against the backdrop of a strong market and economy, we are capitalizing on those investments to move up the value chain and profitably grow our company.”
Nucor’s net sales increased 16 percent to $6.5 billion in the second quarter and shipments to outside customers increased 3 percent quarter-over-quarter to 7.2 million tons. Improvement was noted in all product segments. Average price per ton jumped 12 percent from the first quarter and 17 percent from a year ago. The capacity utilization rate at Nucor’s steel mills was 95 percent compared to 92 percent in the previous quarter and 89 percent in Q2 2017.
In the first half of 2018, Nucor’s consolidated net sales increased 20 percent to $12.03 billion, compared with $9.99 billion in last year’s first half. Total tons shipped to outside customers in the first half of 2018 were 14,164,000, an increase of 6 percent from the first half of 2017, while average sales price per ton increased 13 percent.
Nucor anticipates earnings will continue to improve in the third quarter with the steel mill segment performance remaining strong. Margin expansion is expected primarily at the company’s sheet and plate mills.
Margin compression is expected in the raw materials segment in the third quarter. Scrap and scrap substitute cost used during the second quarter was $373 per ton, an 11 percent increase from the first quarter and 19 percent from a year ago.
During Nucor’s earnings call, Ferriola said prime scrap will continue to come under pressure and Nucor will need more of it as its products go up the value chain. The company is concerned about sourcing iron ore from politically unstable areas and wants to be sure it can take care of its own iron needs. “At some point, we will make an evaluation on a second DRI plant if we feel that is necessary,” said Ferriola.
Nucor’s Louisiana DRI plant was down for scheduled maintenance for about 30 days, but is expected to be operational starting tomorrow.
Nucor announced plans in May to build a $240 million galvanizing line at the company’s sheet mill at its in Arkansas facility. The line will have an annual capacity of approximately 500,000 tons and is expected to be operational in the first half of 2021. The company is actively looking for promising new acquisitions.
The company’s tubular steel business is in its second year and is surpassing expectations. The division is on track to deliver 1.1 million tons of pipe this year, compared to 900,000 tons last year.
Ferriola said Nucor continues to support the Section 232 tariffs. The comprehensive trade action is a deterrent to the “whack-a-mole” environment the U.S. has dealt with in which steel exports are moved about to escape tariff duties. Nucor plans to continue to pursue antidumping and circumvention cases despite the Section 232 action. Ferriola said there are a couple of products the company is looking to bring a solid case against. The “incredibly massive trade deficit” must be addressed, said Ferriola. Nucor believes the Section 232 measures will bring trading partners back to the table to reach more balanced trade agreements.
Nucor has seen some new business due to the tariffs, but its first priority is taking care of long-term loyal customers, company executives said. New customers are evaluated for their value to the company’s long-term strategy.
When asked about impacts to Nucor from tariff retaliation, Ferriola said the impacts are slight. He sees it as a “net zero” situation in that rebar shipped to Canada under Canadian tariffs will be offset by less imports coming into the country to compete with domestic steel mills. Nucor’s joint venture in Mexico serves the automotive industry in Mexico and is, therefore, not subject to tariffs.
“We believe at the end of the day there will be a net gain for the steel industry in general, to the United States economy and to our company as a result of what is happening in trade,” said Ferriola.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/sandy-williams.jpeg)
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/stelco.png)
Steel Summit 2024: Stelco CEO reflects on strategy, growth, and sale to Cleveland-Cliffs
In a candid fireside chat with SMU Senior Analyst/Editor David Schollert, Stelco’s CEO Alan Kestenbaum opened up about Stelco’s pending sale to Cliffs, his business strategy, outlook for the industry, and plans for the future. The chat took place on Tuesday, Aug. 24, at the 2024 SMU Steel Summit in Atlanta.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/AISI.png)
AISI: US steel shipments unchanged in July vs. June, down on-year
Domestic steel shipments remained nearly flat in July month over month but fell from a year earlier.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/white_house.png)
Media reports: Biden could block USS sale on national security concerns
President Joe Biden could block the $15-billion sale of U.S. Steel to Japan's Nippon Steel by citing national security concerns That’s according to reporting in the Washington Post and the Financial Times that was later picked up by the New York Times as well as in wire services.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/US_Steel.png)
USS threatens to cut ‘thousands’ of jobs, move HQ if Nippon sale blocked
U.S. Steel could slash thousands of jobs, shift away from integrated steelmaking, and move its headquarters out of Pittsburgh if its acquisition by Nippon Steel isn’t completed, the company’s top executive said. “We want elected leaders and other key decision makers to recognize the benefits of the deal was well as the unavoidable consequences if the deal fails,” company President and CEO David Burritt said in a statement on Wednesday.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/SSAB.png)
CRU: SSAB to expand Mobile plate mill
SSAB plans to spend $12 million to boost production capacity at its electric-arc furnace (EAF) plate mill in Mobile, Ala. The Sweden-based steelmaker will do that by expanding the existing furnace there. Shot blast equipment will also be upgraded. The expanded capacity is expected to come online late next year. The mill currently has an […]