Nucor Expects Strongest Q2 in Company History After Q1 Dip

“Our key forward looking indicators for 2022 remain favorable, and we expect another strong year in both earnings and cash generation,” Nucor president and CEO Leon Topalian said in a statement released with earnings data on Thursday, April 21.

All told, Nucor recorded a profit of $2.10 billion in the first quarter of 2021, down 6.7% from $2.25 billion in the fourth quarter of 2020 but more than double $942.4 million in the first quarter of last year.

Sales were $10.49 billion in the first quarter of 2022, up 1.3% from $10.36 billion in the fourth quarter 2021 and up 49.4% from $7.02 the first quarter of last year.

While sales were stellar, operational figures were mixed. Case in point: Overall operating rates at Nucor’s steel mills were 77% in the first quarter, down from 89% in the fourth quarter of 2021 and down from 95% in the first quarter of last year.

Lower profits from the company’s steel mill segment – which also includes bar and structural products – were primarily the result of weakness on the flat-rolled side.

“While end market demand remains strong, average realized selling prices in sheet softened during the first quarter reflecting increased import volumes coupled with modest destocking,” the company said.

Shipments of flat-rolled steel were also lower. Nucor shipped 2.39 million tons of sheet in the first quarter of 2022, down 19% from 2.93 million tons in the first quarter of 2021. And the company shipped 398,000 tons of plate in the first quarter of this year, down 33% from 596,000 tons in the same quarter last year.

Why might shipments have been lower? Recall that the first two months of the first quarter saw sheet prices in a tailspin before Russian forced invaded Ukraine in late February. The ensuing war drove both raw material and finished steel prices sharply higher in March.

Some buyers took advantage of lower steel prices early in the year. But others remained on the sidelines until it was apparent that steel prices were no longer falling.

Just how extreme were the price moves? Steel Market Update’s hot-rolled coil price began the year at $1,600 per ton ($80 per cwt) and had fallen nearly 38% to $1,000 per ton by the beginning of March. Prices whipsawed upward because of the war in Ukraine and ended last month $1,435 per ton, or 43.5% higher.

HRC prices have continued mostly upward in April and were at $1,480 per ton this week – although the pace of gains has moderated.

Nucor thinks that the trends that were a headwind for profits in the first quarter – namely, weakness in flat-rolled products – will become a tailwind in the second quarter.

“The steel mills segment earnings are expected to strengthen due primarily to increased profitability at our sheet and plate mills,” the company said.

By Michael Cowden, Michael@SteelMarketUpdate.com