Charlotte, North Carolina-based Nucor Corporation reported Thursday earnings of $112.3 million for Q2 2012, down from $145.1 million in Q1, and less than half of Q2 2011 earnings of $299.8 million. Earnings for the first half of 2012 totaled $257.4 million, compared to $459.4 million for the comparable period last year.
Nucor said in a press release that its sheet mills "experienced the most severe downward trend during the quarter with profitability in April 2012 that was more than double profits earned in June 2012," and cited the import surge that began during the first half of 2012, undercutting seasonal pricing momentum, new domestic supply in addition to a combination of political and economic uncertainty. Nucor also said that "it is worth noting several positive factors for sheet steel that should drive favorable pricing momentum by the end of the third quarter. The positive factors include recent reductions in sheet steel imports and shuttered and reduced operating rates by newer domestic market entrants." In discussing the recent idling of RG Steel and possible sale of ThyssenKrupp USA, Nucor's Chairman and CEO Dan DiMicco that ThyssenKrupp was "one of those bridges that shouldn't have ever been built," and while there are "very few steel companies that aren't thinking about having an involvement," the big issue at hand is that "the market doesn't need (the added capacity)."
Additionally, lower scrap pricing reduced the profitability of Nucor's scrap processing business, but DiMicco noted that the weakened scrap pricing trend may have bottomed in early July with a pick-up in scrap export activity, but only time will tell if the early July scrap pricing was a true bottom followed by stability. DiMicco said during the question-and-answer portion of the call that over the past couple of scrap buys, prices have tumbled over $100/lt, but some of that may soon be "given back to the market." The average scrap and scrap substitute cost per ton used in Q2 2012 was $427, a decrease of 4 percent from $445 in Q1, and a decrease of 4 percent from $444 in Q2 2011.
Nucor's 2.5 million ton DRI facility in Louisiana is also progressing well, and the majority of the equipment is set to arrive in 2012, and completion of construction and initial start-up is anticipated in mid-2013. DiMicco dispelled rumors regarding controversy over the air permits in Louisiana: "Rumors always abound," especially when it comes to environmental issues, but "we have zero concern."