Nucor to delay Kentucky investments: Update

Add investment details, comments from chief executive.

US steelmaker Nucor is delaying investments in two mills in Kentucky because of uncertainty in the steel market surrounding impacts of the Covid-19 pandemic.

The North Carolina-based steelmaker is delaying investment in its hot-rolled coil (HRC) plant in Gallatin, Kentucky, which has been undergoing upgrades to double capacity to 3mn short tons (st)/yr by mid-2021.

Nucor will also push off some investments in its new 1.2mn st/yr plate mill in Brandenburg, Kentucky, that was expected to be completed in 2022.

The investment delays are expected to save Nucor more than $500mn in capital expenditures in 2020, which will drop to $1.5bn overall. Nucor's chief executive Leon Topalian said its too early to know by how much either project could be delayed.

The company is expected to post a loss in the second quarter because of the market downturn from the coronavirus pandemic, its first quarterly loss since the end of 2015.

Nucor expects market conditions to bottom out in the second quarter, resulting in a loss for the company in that quarter, and return to profitability in the second half of 2020. The company has seen the sharpest declines in demand from the automotive and energy sectors. Its largest end market, nonresidential construction, has "shown resiliency moving through this pandemic" with major impacts there being delays to projects rather than outright cancellations, Nucor said.

The loss would be the first for Nucor since the fourth quarter of 2015, when Nucor posted a loss of $62mn, and only its third loss in the last decade.

Nucor said it restarted its Louisiana direct reduced iron (DRI) plant on 25 April, three weeks after it idled the plant on 2 April because of the market downturn and the spread of coronavirus in the state. The company's DRI plant in Trinidad and Tobago, which closed on 30 March, remains offline.

Nucor does not expect layoffs to result from the current downturn in the steel market.

Nucor's first quarter ended on 4 April this year, while in 2019 it ended 30 March. Total steel shipments in the first quarter increased by 8.5pc year-over-year to 6.5mn st. Sheet shipments rose by 8.7pc to 2.87mn st, while bar shipments increased by 12pc to 2.24mn st. Structural and plate shipments rose by 21pc to 684,000st and by half a percent to 610,000st, respectively.

Nucor wrote down a loss of $287.8mn on its long products joint venture with Duferco in Italy, called Duferdofin Nucor. The joint venture stopped production at its melt shop in San Zeno Naviglio in northern Italy on 12 March because of the spread of coronavirus.

Nucor posted a first quarter profit of $20.3mn, down by 96pc from the $501.8mn it made in the first quarter of 2019.

By Rye Druzin