Steelmakers said earlier this year that booming construction and heavy equipment industries and slowly expanding automotive production have slowed demand.
Despite higher raw material costs caused by Russia’s invasion of Ukraine in February, steel company executives said rapidly rising steel prices allowed the companies to turn in better-than-expected profits in the first quarter of the year.
“Overall, the underlying demand for the end markets we serve remains incredibly strong,” said
chief executive of
The largest steel producer in the US by sales.
steel maker Nucor for sale,
steel mobility Inc.
Steel prices are rising after customers pulled back on purchases and a sharp fall in prices that began late last year after an unprecedented buying spree for most of 2021. The inventory was to be rebuilt. North Carolina-based Nucor’s sheet steel production volume during the first quarter of this year was the lowest in a year since 2015, according to Credit Suisse.
Mr Topelian said steel customers increased their purchases during the quarter, accelerating their production after Nucor reduced mills production at the start of the year for maintenance work.
“You’re going to have a very quick recovery,” he said during a conference call. Mr Topelian said on Thursday that Nucor’s second quarter ending in June is on course to post record quarterly profit.
Officials said the commercial construction and machinery sectors have increased their purchases of steel recently. Both Nucor and Indiana-based competitor Steel Dynamics Inc. reported large sales and income growth from ancillary businesses that supply construction materials, including joists and decking, piling and fencing.
Steel Dynamics’ first quarter sales of its fabricating unit rose to $257 million to $930 million from $257 million during the same period last year. The unit’s quarterly operating profit increased to $467 million, which is 30% higher than the unit’s profit during the entire 2021.
“Steel manufacturing is operating at levels never seen before,” Chief Executive
told analysts on Thursday.
Steel makers have faced high prices for the raw materials used to make steel, especially scrap steel and pig iron, a type of cast iron derived from ore that is used to make steel in electric furnaces. is done for. According to the US Census Bureau, Russia and Ukraine are the world’s two largest producers of pig iron, accounting for two-thirds of the pig iron imported into the US last year.
Since the outbreak of fighting in Ukraine, shipments of pig iron from the countries have stopped, forcing US steelmakers to seek other sources, often at higher prices. The spot market value of pig iron in the US is up about 70% from the beginning of the year. Steel makers are using more scrap in their furnaces to reduce their reliance on pig iron, which has helped push up scrap prices in recent weeks.
Chief Executive Officer of Cleveland-Cliffs
Higher raw material costs on Friday will keep prices for finished steel in the US elevated for the rest of the year. Lower exports of finished steel from Russia would also curtail global steel supplies, he said, raising steel prices in Europe and other countries that usually buy Russian steel.
Cleveland-Cliffs has its own supply of iron ore in the US, and a plant in Ohio that reduces it into concentrated iron that can be smelted in electric furnaces such as pig iron to make steel. The company bought a series of scrapyards last year to hedge its exposure to the volatile scrap market.
“We will benefit through higher margins on steel as our cost structure is almost not impacted,” Mr. Goncalves said.
The Cleveland-based company is the largest supplier of sheet steel to the US automotive industry, where production volumes have been constrained for months due to a lack of parts, particularly semiconductor chips. Cleveland-Cliffs said its first-quarter steel shipments to the automotive industry increased by 200,000 tons compared to the fourth quarter of 2021. The volume was the highest since the chip shortage began a year ago, the company said.
Cleveland-Cliffs said it renegotiated six-month customer contracts beginning in April with higher prices. The company raised its forecast average selling price for its steel this year to $1,445 a tonne, up $220 from its prior estimate.
“The April contract was a huge success,” said Mr. Goncalves. “We were able to achieve everything we were planning for.”
Write Bob Tita Eight [email protected]
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