Nucor -- Additional color on lowered guidance
As a follow-up to our 9:01 comment, steel producer Nucor guides to Q1 EPS of $0.10-0.15, well below the $0.40 CapitalIQ cosnensus. This range is below the qualitative guidance provided ont he Q4 call: "We currently expect that Q1 earnings will decrease from Q4 to a level slightly exceeding 1Q14."
Overall operating performance at the steel mills segment for Q1 is expected to decrease significantly compared to Q4 primarily due to lower selling prices and margins resulting from what the company describes as "the exceptionally high level of imports flooding the domestic market." Total imports increased 38% in 2014 compared to 2013, with imports accounting for approximately 34% of the total domestic shipments in 2014. Import levels gained momentum throughout 2014, as the imports in 2H14 were 10% higher than 1H14. This trend has continued in 2015, with January total imports accounting for approximately 39% of total January domestic shipments.
Although all steel prices are being driven lower by imports, the sheet market is experiencing the greatest impact. Published index pricing indicates that hot-band prices at the end of 2014 decreased 11% from its peak level in 3Q14. Through mid-March 2015, hot-band pricing has decreased an additional 19% from the end of 2014. Co expects that steel mill margins for all products should improve in 2Q15 as the co begins to realize the benefits of lower raw materials costs and selling prices begin to stabilize.
Conditions remain challenging in energy markets, in which the collapse in oil prices and continued high levels of imported OCTG products has caused an inventory glut in the pipe and tube sector. Automotive markets remain strong and are continuing to improve. Co continues to see improving demand in the nonresidential construction markets. Once energy market steel inventories are rebalanced later this year, co expects overall steel demand to meet or exceed levels seen in 2014...NUE currently trading at 48.05 (-2.5%)
-->This is not entirely surprise as STLD guided below consensus after the close on Tuesday. Other steel producers to watch include: AKS, CMC, MT, SCHN, X. Steel processors to watch: ROCK, RS, RYI, WOR, ZEUS.
Overall operating performance at the steel mills segment for Q1 is expected to decrease significantly compared to Q4 primarily due to lower selling prices and margins resulting from what the company describes as "the exceptionally high level of imports flooding the domestic market." Total imports increased 38% in 2014 compared to 2013, with imports accounting for approximately 34% of the total domestic shipments in 2014. Import levels gained momentum throughout 2014, as the imports in 2H14 were 10% higher than 1H14. This trend has continued in 2015, with January total imports accounting for approximately 39% of total January domestic shipments.
Although all steel prices are being driven lower by imports, the sheet market is experiencing the greatest impact. Published index pricing indicates that hot-band prices at the end of 2014 decreased 11% from its peak level in 3Q14. Through mid-March 2015, hot-band pricing has decreased an additional 19% from the end of 2014. Co expects that steel mill margins for all products should improve in 2Q15 as the co begins to realize the benefits of lower raw materials costs and selling prices begin to stabilize.
Conditions remain challenging in energy markets, in which the collapse in oil prices and continued high levels of imported OCTG products has caused an inventory glut in the pipe and tube sector. Automotive markets remain strong and are continuing to improve. Co continues to see improving demand in the nonresidential construction markets. Once energy market steel inventories are rebalanced later this year, co expects overall steel demand to meet or exceed levels seen in 2014...NUE currently trading at 48.05 (-2.5%)
-->This is not entirely surprise as STLD guided below consensus after the close on Tuesday. Other steel producers to watch include: AKS, CMC, MT, SCHN, X. Steel processors to watch: ROCK, RS, RYI, WOR, ZEUS.