Nucor anticipates better performance from its bar and structural mills in Q3 2020 because of rising demand in the nonresidential construction market.
However, the company, which released its Q2 2020 earnings on Thursday, expects the next quarter to be very similar to Q2 2020 for earnings and steel mill business because of lower sales prices for its sheet and plate mill products. The steelmaker’s raw materials section’s performance is expected to decrease in Q3 2020 due to lowered raw materials prices. Challenges associated with the COVID-19 pandemic are likely to impact the company’s market sentiment in Q3 2020 also, Nucor noted.
Nonresidential construction demand was strong in Q2 2020 with the company’s raw materials section improving slightly compared to the previous quarter and the business’s performance exceeding estimates in June. However, Nucor’s sheet and plate mills were adversely affected due to lowered activity in the oil and gas market last quarter.
Nucor’s total steel mills shipments in H1 2020 declined by 4pc to 11.3mn mt from 11.8mn mt in the first six months of 2019. Overall steel mills shipments declined by 18pc to 4.77mn mt in Q2 2020 from to 5.8mn mt in the same quarter last year.
Tons sold to outside customers in H1 2020 fell by 6pc to 12.7mn mt, from 13.5mn mt sold during the same period last year, while shipments to outside customers in Q2 2020 dropped 19pc to 5.5mn mt from 6.7mn mt in Q2 2019.
The company’s steel mills operating rates declined to 79pc in H1 2020 from 85pc in the same period last year and were down to 68pc in Q2 2020 compared with 89pc in Q1 2020 and 84pc in Q2 2019.
The steelmaker’s consolidated net sales fell by 17pc to $9.95bn in the first six months of 2020 from $11.99bn in H1 2019 and declined by 27pc to $4.3bn in Q2 2020 from $5.9bn in the same quarter last year.
Nucor’s net earnings dropped by 85pc to $129.2mn in H1 2020 from $888.3mn in H1 2019 and fell by 71pc to $108.9mn in Q2 2020 compared to $386.5mn in the same quarter last year.