) declined as much as 1.3% on Sep 26 after announcing that one of
the its three storage domes located at Nucor Steel Louisiana in
St. James Parish collapsed, thereby delaying the opening of the
plant being constructed at the site. The market reacted
negatively to the news and the company's shares skid as much as
roughly 2% in regular trading last Friday.
Nucor's new Direct Reduced Iron (DRI) plant has been under
construction for two years. Construction activity was about to
finish within few weeks and start production. However now,
operations are expected to be delayed till the end of the year.
Good news for Nucor is that the collapse has not resulted in any
injuries or any environmental damage. An investigation for the
damage and the damage assessment is underway. In the meantime,
construction and hot commissioning of the plant are continuing.
Direct reduced iron is one of the ingredients used in the making
of steel and it is produced by using natural gas to convert iron
ore pellets into DRI. The storage domes stockpiled the iron ore
The $750 million DRI plant is expected to produce 2.5 million
tons of DRI per year when the operations are in full swing,
making it the largest DRI plant across the globe and the first
one operating in the U.S. in several years. Nucor Steel Louisiana
planned to hire 150 employees to work at the plant, out of which
140 workers are already employed.
Nucor issued its guidance for third quarter 2013 on Sep 17.
The company expects earnings to be in the range of 35 cents to 40
cents, an increase from 35 cents it reported in the year-ago
quarter and 27 cents logged in the previous quarter. The
projected earnings include LIFO credit of 3 cents per share.
Nucor stated that performance in its steel mills has shown
improvement sequentially as a result of competitor supply
disruptions, customer inventory restocking and some market demand
improvement. Structural steel results also improved due to higher
production at Yamato Steel following its 17 day planned outage
during the second quarter and customer inventory restocking.
Nucor also expects its fabricated construction products
businesses to report increased profitability compared with the
second quarter. The company expects its raw materials business to
report weak results in the third quarter due to higher start up
costs at its new DRI plant in Louisiana.
While Nucor stated that non-residential construction market
may remain weak in 2013, the company expects it to slowly improve
from historically low levels. Manufactured goods including energy
and automotive are showing strength.
Nucor is expected to release its third quarter results on Oct
14. The company currently retains a Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks
Companhia Siderurgica Nacional
Shiloh Industries Inc.
Nippon Steel & Sumitomo Metal Corp.
). All of them hold a Zacks Rank #1 (Strong Buy).
NIPPON STEEL CP (NSSMY): Get Free Report
NUCOR CORP (NUE): Free Stock Analysis Report
SHILOH INDS INC (SHLO): Get Free Report
CIA SIDERUR-ADR (SID): Free Stock Analysis
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