Nucor (NUE) wins on strong demand and higher steel prices
We published an updated research report on Nucor Corporation NUE May 26.
Nucor, which is one of the leading players in the steel sector with United States Steel Corporation X, Steel Dynamics, Inc. STLD and ArcelorMittal MT is benefiting from the strength of the non-residential construction market and a strong recovery in the automotive market.
Strong customer demand has led to a rebound in the automotive market. The company is also seeing improved conditions in the heavy equipment, agriculture and renewable energy markets. Increased demand is supporting its shipments. Nucor should also take advantage of significant market opportunities through its strategic investments in its most important growth projects.
Nucor is also benefiting from a rebound in steel prices. Higher average selling prices boosted its sales and bottom line in the first quarter. Its average selling price climbed 25% year over year during the quarter.
Nucor, during its first quarter call, said it expects second quarter profits to be the highest quarterly profits in its history, surpassing the all-time high set in the first quarter. Profits are expected to be primarily attributable to higher prices and margins in the steel mill segment.
Notably, steel prices in the United States have rebounded strongly and reached record levels after falling to multi-year lows caused by the pandemic in August 2020. The rebound was fueled by growing demand (particularly automotive and construction), supply shortages and rising raw materials. fresh.
Hot-rolled coil (HRC) benchmark prices started to recover in September 2020 due to back-to-back price actions from US steel mills, tight supply and increasing end market demand, especially in the automobile. Prices have skyrocketed since then and are to levels not seen in over a decade. As such, the rise in domestic steel prices should act as a catalyst for the Nucor steelworks unit.
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