US steelmaker Nucor expects the market downturn from Covid-19 will result in it posting its first quarterly loss since the end of 2015.
The North Carolina-based steelmaker expects market conditions to bottom in the second quarter, resulting in a loss for the company in that quarter, and return to profitability in the second half of 2020. The company has seen the sharpest declines in demand from the automotive and energy sectors, while its largest end market, nonresidential construction, has "shown resiliency moving through this pandemic" with major impacts there being delays to projects rather than outright cancellations, Nucor said.
The loss would be the first for Nucor since the fourth quarter of 2015, when Nucor posted a loss of $62mn, and only its third loss in the last decade.
Nucor said it restarted its Louisiana direct reduced iron (DRI) plant on 25 April, three weeks after it idled the plant on 2 April due to the market downturn and the spread of coronavirus in the state. The company's DRI plant in Trinidad and Tobago, which closed 30 March, remains offline.
Nucor will also cut 2020 capital expenditures by a quarter to $1.5bn, affecting some projects that are already under construction and delaying others. While the company did not specify which projects would be affected, Nucor's two biggest projects are the expansion of its hot band mill at its Gallatin, Kentucky, flat-rolled mill and a new 1.2mn short ton (st)/yr plate mill in Brandenburg, Kentucky, which combined represent at least $2bn of investments.
Nucor does not expect layoffs to result from the current downturn in the steel market.
Nucor's first quarter ended on 4 April this year, while in 2019 it ended 30 March. Total steel shipments in the first quarter increased by 8.5pc year-over-year to 6.5mn st. Sheet shipments rose by 8.7pc to 2.87mn st, while bar shipments increased by 12pc to 2.24mn st. Structural and plate shipments rose by 21pc to 684,000st and by half a percent to 610,000st, respectively.
Nucor wrote down a loss of $287.8mn on its long products joint venture with Duferco in Italy, called Duferdofin Nucor. The joint venture stopped production at its melt shop in San Zeno Naviglio in northern Italy on 12 March due to the spread of coronavirus.
Nucor posted a first quarter profit of $20.3mn, down by 96pc from the $501.8mn it made in the first quarter of 2019.
