Nucor moving ahead with expansions

After slowing its investments as Covid-19-related shutdowns roiled the steel industry, Nucor is accelerating its investments in the expansion at its Gallatin sheet mill and the construction of a new plate mill in Kentucky.

The electric arc furnace (EAF) steelmaker may delay its sheet production expansion at its Gallatin mill near Ghent, Kentucky, by a few months but expects a mid-2021 completion. The expansion will almost double the plant's capacity to 3mn short tons (st)/yr.

A new 1.2mn st/yr plate mill, in Brandenburg, Kentucky, is expected to be completed on schedule in late-2022, despite the delay earlier in the year.

Nucor will increase its capital spending for the rest of 2020 by $250mn, making the total spend around $1.7bn for the year.

The Gallatin mill has commissioned its 500,000 st/yr, 72-inch galvanizing line. Nucor's recently opened 450,000 st/yr reinforcing bar (rebar) micromill in Sedalia, Missouri, is projected to reach full production capacity by December. Another rebar micromill in Frostproof, Florida, is expected to start up in the fourth quarter.

Progress has been made at the company's Hickman, Arkansas, mill where a new 500,000 st/yr galvanizing line is expected to be completed by the second half of 2021.

A new 500,000 st/yr merchant bar quality (MBQ) line at Nucor's Kankakee, Illinois, mill is being commissioned and will start shipping orders before October.

Nucor expects third quarter performance in its steel mills segment to be similar to the second quarter, when capacity utilization rates were at 68pc. While chief executive Leon Topalian expects utilization rates to improve in the third quarter, he did not specify by how much.

In the third quarter of 2019, utilization rates were at 83pc.

In the second quarter, Nucor's sheet shipments fell by 23pc to 2mn st from the prior year, while bar shipments declined by 14pc to 1.73mn st.

Structural shipments fell year-over-year by 7pc to 517,000st, while plate shipments fell by 17pc to 438,000st. Total shipments fell in the second quarter by 18pc to 4.8mn st compared with the prior year.

Nucor's second quarter profit comes in constrast to statements from late April, when the company expected to post its first quarterly loss since the end of 2015. The earnings per share was more than double what the company's second quarter guidance estimated in June.

Nucor posted a second quarter profit of $108.9mn, still down by 72pc compared with a $386.5mn in profit in the prior-year period.

By Rye Druzin