NEW YORK Nucor Corp.s disappointing first-quarter earnings reflected an overall weakness in the steel sheet market that will likely last into 2013, but improving demand for long products could make up for it, chief executive officer and president John Ferriola told investors on a conference call.
"We see 2013 to be slightly better in terms of volume and pricing in all of our products with the exception of sheet," Ferriola said.
The U.S. steel sheet market is facing overcapacity issues, leading to short lead times and depressed margins. "The amount of overcapacity in the sheet market is phenomenal right now," Ferriola said. "Its clearly an oversupply market, and that problem is amplified by the surge of imports that have come in over the past year (or) year and a half. ... Imports continue to be an anchor around the neck of the entire industry."
Ferriola said that promising signs in construction markets pointed toward better long product volumes for the rest of the year, despite a year-on-year decline in shipments in the first quarter of 2013.
"As we look forward into 2013, we see a slightly better nonresidential construction environment. We use the word cautiously optimistic," Ferriola said. "When you look at residential construction, housing starts are up over 1 million units annualized (for) the first time since 2007 or 2008. So there are some encouraging signs that things are getting better in nonresidential construction (as well)."
Ferriola added that Nucor customers in construction end markets were "more positive than weve seen them in a long time," and that the Charlotte, N.C.-based companys Vulcraft division, which produces finished construction products, had seen backlogs and margins improve. "On long products, we are seeing some slight improvement, and we anticipate seeing that as the year plays out," he said.