Nucor announced COVID-19 has had minimal impact this quarter on its operations and supply chains, however, it anticipates severe affects through the rest of 2020.
Steel Dynamics reported a strong Q1 2020, but the company warns it does not know how the unfolding COVID-19 crisis will affect its financials through the rest of the year.
According to Nucor’s Q1 2020 guidance, it expects steel mill earnings to be higher than last quarter because of higher selling prices and volumes at its sheet, bar and plate mill. However, Nucor’s steel mills are less profitable this quarter than last because of seasonality. Its raw material segment is expected to increase this quarter from Q4 2019 because of better raw material prices, removal of impairment charges on natural gas, and better DRI facility performance.
Steel Dynamics’ earnings this quarter anticipated to surpass last quarter’s earnings. The average price of steel products in Q1 2020 is projected to increase, which could offset rising scrap costs. Growth in non-residential construction projects is at record high levels for the company, and it hasn’t experienced delays yet. Its earnings and operations have fared well this quarter but, overall, have fallen behind Q4 2019’s performance. However, it is mainly due to seasonality. The firm’s metal recycling platform is expected to improve and stabilize scrap prices, while increasing volume and metal margin expansion.
Both Nucor and steel Dynamics are concerned about the impact COVID-19 could have on their bottom lines and on their employees’ health. With temporary closures of steel consuming businesses across the US, they expect to feel financial pressure from the pandemic.