Nucor Posts Record Profits in '21, Predicts 'Slightly Reduced' Q1 '22

All told, the Charlotte, N.C.-based steelmaker posted an annual profit of $6.83 billion in 2021, a nearly tenfold increase from $721.5 million in 2020 on sales that rose 81.2% to $36.5 billion, according financial results released on Thursday, Jan. 27.

“By so many measures, 2021 was an extraordinary year for Nucor. … Our record financial performance is the result of years of work investing to strategically position and grow our portfolio of capabilities across the steel value chain,” Nucor President and CEO Leon Topalian said in a statement.

For the fourth quarter, Nucor recorded net income of $2.25 billion, up 5.6% from $2.13 billion in the third quarter – the prior quarterly record – and up more than fivefold from $398.8 million in the fourth quarter of 2020. Net sales were $10.36 billion in the fourth quarter, roughly even with $10.31 billion in the third quarter and nearly double $5.26 billion in the fourth quarter of 2020.

But Nucor predicted that the string of record quarterly profits would end in 2022, with first-quarter profits expected to be “slightly reduced” from fourth-quarter results despite continued strong demand from the nonresidential construction sector. And the company said profits from its steel mills would decrease on lower income from its sheet operations.

That reflects spot steel price trends: SMU’s hot-rolled coil price averaged $1,794 per ton in the fourth quarter, down 5.2% from $1,893 per ton in the third quarter. Recall that contract prices, which account for a bulk of sheet sales, typically follow spot prices on a modest lag.

Nucor’s sheet shipments also trended lower in the fourth quarter. The company shipped 2.50 million tons of sheet products in the fourth quarter of 2021, down 6% from 2.66 million tons in the same quarter the prior year. Plate shipments were roughly flat: 489,000 tons in the fourth quarter of last year compared to 485,000 tons in the fourth quarter of the year prior.

Operating rates were also lower: 89% in the fourth quarter compared to 96% in the third quarter. The company said that was in part because of a planned outage in December at its Gallatin sheet mill in Ghent, Ky.

On the raw materials side, prices also dipped. The average scrap and scrap substitute cost was $508 per gross ton in the fourth quarter, down 1% from $511 in the third quarter of 2021, Nucor said.

Scrap substitutes are products such as direct reduced iron (DRI) and pig iron.

But raw material prices remain sharply higher year over year.

Average scrap and scrap substitute cost for full-year 2021 were $469 per gross ton, a 62% increase compared to $290 in full-year 2020, Nucor said.

And scrap price gains are mild compared to those in finished steel. Case in point: Hot-rolled coil prices averaged $1,606 per ton in 2021, up 175% from $583 per ton in 2020, according to SMU’s interactive pricing tool.

By Michael Cowden, Michael@SteelMarketUpdate.com