A diverse product portfolio along with flexible production capabilities and new projects that are progressing as planned have strengthened Nucor’s position despite the COVID-19 pandemic-related uncertainties.
Speaking at the Association for Iron and Steel Technology’s the William T. Hogan, S. J. Memorial Lecture
via a webinar on Wednesday Leon Topalian, president and chief executive officer of Nucor said that the steelmaker had adjusted to weaker market conditions during the pandemic.
Sales volumes to outside customers declined by 6pc to 13.5mn nt (12.3mn mt) in H1 2020 against the same period last year. Raw materials sales volumes declined by 21pc while steel mills only declined by 5pc during this period, he said.
Making the best of the current situation
Market conditions for sheet and plate mills remain challenged but a surge in recent order is helping to increase capacity utilization at many flat-rolled mills. The economic revival is expected in Q4 2020 with an increasingly improved status as 2021 progresses, Topalian said.
He added that the non-residential and residential construction markets continued to benefit the bar and structural mills. The company’s rebar mill in Sedalia, Missouri and the MBQ project in Illinois are seeing solid results while the construction of the new $1.35bn steel plate mill in Kentucky is progressing as per the schedule and will begin operations by the end of 2022. The site has the capacity to produce 97pc of the plate products on demand in the US market.
Steel in a post-pandemic world
Answering a question on when business would normalize, Topalian noted that most market participants wanted to return to pre-COVID 19 levels. For Nucor, though, he said that the company plans to leverage the learnings from the pandemic to strengthen its steel business and remain nimble through unforeseen circumstances.
He reiterated the Steel Manufacturers Association’s (SMA’s) position that Nucor has historically worked with both administrations and will continue to do so with whoever wins the presidency. Recently, the steelmaker was involved in helping develop a level playing field for steel companies by improving trade agreements, defending tariff assignments, promoting policies to support fair business practices, and promoting the need for an infrastructure investment bill that is long overdue.
The safeguards provided by Section 232 and the USMCA will help the industry rebound better than after the 2008 financial crisis, Topalian said. The steel industry was besieged by imports during the 2014-2017 period as the economy began to truly recover in 2012-2013 and that allies were among the most aggressive importers.
Topalian reinforced that trade concessions cannot be given out easily without an a real evaluation of domestic capacities, opportunities, and fair trading framework. For national security reasons, US needs to have self-sufficiency of core capabilities including PPE, chemicals, pharmaceuticals, and steel. As the COVID-19 pandemic showcased, supply chains can be easily disrupted by elements outside immediate control.
He also highlighted the longstanding need to update the US infrastructure as well as the economic boost an infrastructure bill could give to the economy and for expanded employment and development. He emphasized the need for the final bill to include a Buy American provision to ensure the investment benefited most the domestic supply chain.