Nucor Prices On The Rise

Jason Sandefur

Nucor Corp. reported revenue for the third quarter of 2005 dropped 7% to $3.03 billion, while net income dipped 30% to $291.9 million. Average sales price per ton decreased 15% from the third quarter of 2004 and decreased 8% from the second quarter of 2005.

Total tons shipped to outside customers were a record 5,298,000 tons in Q3, an increase of 9% over the third quarter of 2004 and an increase of 5% over the second quarter of 2005. The average scrap and scrap substitute cost per ton in Q3 dropped 13% to $217. Total energy costs increased $12 per ton during Q3, including a $6 per ton jump from the second quarter to the third quarter of 2005.
But prices are going back up. American Metal Market reports that Nucor began increasing its surcharge on reinforcing bar, merchant bar and structural products by $40 a ton on October 1. At the same time, Nucor trimmed book prices by $20 a ton, resulting in a net gain of $20 a ton. The increase puts Nucor’s surcharge at $113 a ton. Nucor did not tack on a surcharge August, followed by a $73 surcharge for September, according to AMM.
The move comes as the Charlotte, NC-based steelmaker is reaping record profits. Net earnings jumped 24% to $963.9 million in the first nine months of 2005. Nine-month sales increased 15% to $9.49 billion. Average sales price per ton increased 9%, while total tons shipped to outside customers increased 5%.
Total steel shipments increased 3% to 15,504,000 tons in the first nine months of 2005. The average scrap and scrap substitute cost per ton increased 9% to $245 in the first nine months of 2005. Total energy costs increased approximately $6 per ton in the first nine months of 2005.
An unnamed steel fabricator expressed frustration at Nucor’s latest hike. “Steel fabricators are struggling to stay afloat, and here you have Nucor standing on the deck throwing us a lighter anchor,” the fabricator explained to AMM. “It doesn’t seem right that the entire steel market is being held hostage by Nucor and its pricing. It’s a dangerous place to be when one company dictates pricing and the others just follow. What Nucor is doing is not necessary because there is nothing to support it. Demand for these products is steady, but not that great. Everyone is fed up with Nucor.”
Nucor repurchased approximately 722,000 shares of Nucor’s common stock at a cost of approximately $39.3 million under a stock repurchase program during Q3, and repurchased approximately 4.7 million shares at a cost of about $245.2 million during the first nine months of 2005. Web: nucor.com �2005 FastenerNews.com