Nucor CEO Hints at Steel Price Hikes

Jason Sandefur

In an ominous sign for the fastener industry, Nucor Corp. CEO Dan DiMicco said he suspects steel pricing has bottomed, but he would not speculate on the magnitude of future pricing increases.
DiMicco also said he believes costs for scrap metal, Nucor”s primary raw material, will hover in the current range “plus or minus $30 a ton,” Dow Jones Newswires reports.\
The Charlotte steelmaker”s second-quarter results proved the value of Nucor”s diverse product line and end markets, DiMicco emphasized.
Despite the weaker conditions for sheet metal, Nucor has had solid demand for re-bar to supply nonresidential construction projects.
And its automotive business has remained steady, thanks to an emphasis on contract pricing in that area. However, potential shutdowns by automotive manufacturers pose some concerns for future demand.
Nucor reported sales increased 14% to $3.15 billion during the second quarter of 2005, while earnings jumped 28% to $322.7 million. The average scrap cost per ton increased 8% to $246, which was down 10% from a first quarter high of $272. Average sales price per ton increased 8%, while total tons shipped to outside customers increased 5% to a record 5.06 million tons. Total energy costs soared 17% during the period, but shipments to outside customers remained flat at 4.69 million tons.
First half sales gained 28% to $6.47 billion, creating an 86% jump in earnings to $677.4 million. Average sales price per ton increased 25%, while total tons shipped to outside customers increased 3%. First half scrap prices gained 21% to $259, and total energy costs rose about $4 per ton during the period.
Steel production during the first six months dropped 30,000 tons to 10.05 million. Total steel shipments increased 1% to 10.15 million tons.
Nucor expects capital spending in 2005 to be about $415 million, including more than $150 million in “greenfield” projects. �2005 FastenerNews.com