Nucor Corp told press Tuesday that it expects its steel shipments to decline by 40 percent in the fourth quarter from the third quarter, with its average mill capacity utilization at slightly above 50 percent.
The company said it expects the first quarter of 2009 to be more positive amidst lower scrap and pig iron costs, and that actual end-user demand is higher than has been reflected in order entry, which will be reflected in first quarter prices. The company press release stated that actual end user demand appears to be down from 25 percent to 30 percent, not the 50 to 60 percent that has been reflected in order entry thus far.
“We expect to see an increase in order entry based on the real end user demand as inventory levels will need to more closely track to real demand,” the release read. “We are already seeing raw material prices increase here and globally and expect to see this impact steel pricing going forward."
While the company declined to give numerical guidance for its fourth quarter earnings, the company stated that it expects to be profitable in the fourth quarter, though only marginally above the break-even level, given the impact of the “unprecedented financial crisis on the economy and steel markets.” Its full year results might still show record profits, the company said, based on the strong results for the first nine months of the year.
Commenting on the fourth quarter guidance, Dan DiMicco, Nucor's Chairman, CEO and President, stated: "We have never been confronted with the economic and steel market conditions that we are seeing today. However, our team is confident that Nucor's position of strength will allow us to capitalize on our company's substantial competitive advantages."
Mr. DiMicco also cited the national infrastructure stimulus package as a positive for the US steel market going into the new year, and he expects the effects of this package will be felt in the second quarter of 2009. He believes that a major concern for the overall economy is the frozen credit market, and he looks to the new administration to “hold lending institutions who received taxpayers' money accountable for significant movement and an increase in the flow of credit at reasonable rates.”