Nucor lowers 2024 output estimate for Brandenburg plate mill

He cited “softer market conditions, elevated plate imports, and our focus on capabilities rather than volume.”

“However, we will continue to focus on achieving full run-rate capabilities and becoming EBITDA-positive by year’s end,” he added.

A request for further information on Brandenburg’s 2024 production estimate was not returned by the time of publication.

Nucor has previously said that the mill will be able to produce 1.2 million short tons (st) annually.

Plate market

Brad Ford, Nucor EVP of fabricated construction products, gave some context on the plate market.

“We’re coming off some pretty strong years for plate. Really, ’21, ’22, and ’23 were pretty robust,” he said.

As previously reported, Nucor announced on July 1 that it would aim to lower its plate tags by $125/st, citing ongoing competition.

Ford addressed two issues.

“One, we are seeing some softness in the more interest-rate sensitive portions of the market,” he said. Specifically, he cited vertical construction and some on the heavy equipment and agriculture side.

The second issue was imports.

“We were challenged in the first half of this year by meaningfully higher levels of imports, which gained some market share and put pressure on pricing,” Ford remarked.

“This pressure on pricing has led our distribution customers to take a pretty cautious approach to purchasing, as they try to right-size their inventories,” he said.

As for bright spots, he said some countries have already used up almost two-thirds of their tariff-rate quotas through the first five months of this year.

“So, we expect a slightly lower import picture in the second half,” he noted.

Also, “bridge and power transmission markets remain strong,” and “we’re hearing from our customers and developers onshore wind is really going to pick up, kind of late in the second half.”

And then there’s the impact of the Infrastructure Investment and Jobs Act (IIJA).

He said funding and project awards really “will be ticking up here in late ’24 and early ’25, which supports not just plate, but our structural businesses and a lot of our steel products.”

Nearing 100% utilization

Topalian was asked if the current utilization rate of Brandenburg of around 20% could be increased to 100% in the next 6-12 months if the plate market was booming.

He reiterated, “We expect that even despite market conditions, that the mill will be able to achieve its full run-rate capabilities in 2024.”

However, Topalian added: “Now we’ll decide how long we need that and how long they run at those capabilities.”

From a technical perspective, Nucor is “still working out some bugs,” he said, “but there’s nothing materially that’s going to keep us from achieving that full rate capacity situation by year’s end.”

Company outlook

Looking ahead, Steve Laxton, EVP and CFO, provided an outlook for Q3: “We expect consolidated earnings to be lower than the second quarter, primarily because of lower anticipated earnings from our steel mill segment.”

He cited lower realized pricing “that has recently continued to decline across most of our major product categories.”