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DiMicco to spearhead ‘proactive’ trade effort

Keywords: Tags  Nucor, Daniel DiMicco, John Ferriola, unfair imports, DRI, natural gas, Thorsten Schier


NEW YORK — Nucor Corp. executive chairman Daniel DiMicco will spearhead a "proactive" effort by the domestic steel industry to battle what it believes are unfairly traded imports.

"Obviously, the way that it’s worked in the past has been a very reactive program. We take action after the damage has been done, after steel companies go out of business, after American workers have lost their jobs. We’re going to be much more proactive," Nucor president and chief executive officer John Ferriola said during the company’s earnings conference call. DiMicco "is going to remain focused on that, and I’ve got great confidence in his ability to get it done."

The company said previously that it was working with the U.S. government to develop a response to low-priced imports (amm.com, Nov. 13).

The surge of imports has hurt the steel sector’s recovery, according to Ferriola. "Imports—which are being dumped, in many instances—continue to represent a serious challenge to the U.S. steel industry’s recovery," he said, citing preliminary U.S. Census figures indicating that imports last year were up 17 percent from 2011 and 38 percent from 2010. "By contrast, U.S. steel mills increased their production by less than 10 percent over the same two-year period."

The Charlotte, N.C.-based steelmaker is expecting a "challenging" first quarter, partly due to high import levels (amm.com, Jan. 29).

"After four years of recession and modest growth, we can still not see signs of a full economic recovery. Steel market conditions remain very challenging," Ferriola said, pointing to an industry capacity utilization rate of 75 percent.

The company continues to see strength in the automotive, energy and heavy equipment markets, but such sectors as nonresidential construction have yet to show a significant upturn.

"Our best guess would probably be maybe two more years of slow growth before we see any significant improvement," Ferriola said.

Nucor expects U.S. automotive production to reach 15 million vehicles in 2013, up from 14.5 million in 2012.

Demand for flat-rolled sheet is "stable," although existing overcapacity is expected to lead to "another challenging year," Ferriola said. Nucor’s lead times for hot-rolled sheet are between two and four weeks, while cold-rolled, galvanized and plate lead times are between four and six weeks.

Scrap prices are expected to remain relatively flat in the near term. "We see it not changing very significantly from where it is today. It’s going to stay within a band, at least for the next month," Ferriola said.

The steelmaker expects its direct-reduced iron (DRI) facility in Louisiana to be running at its full capacity of 2.5 million tons by the end of the year, Ferriola said during the conference call.

The company is investing $260 million in two natural gas drilling programs in 2013. "The drilling of natural gas wells resulting from these two programs is expected to provide enough natural gas to equal Nucor’s usage at all of our steel mills plus the usage of two DRI facilities or, alternatively, three DRI plants," chief financial officer James Frias said.

Editor’s note: This story was updated Jan. 31, 2013, to recharacterize Nucor’s comments on the automotive industry.


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