Biggest U.S. Steelmaker Sees Growth Aided by Import Squeezeby
‘Trade cases help our profitability,’ CEO John Ferriola says
CEO sees acquisitions as ‘great opportunities’ for expansion
Nucor Corp. sees its growth ambitions getting a tailwind from U.S. trade cases that limit imports from countries, especially from China.
The largest U.S. steelmaker is seeking new platforms in different products and countries, Nucor Chief Executive Officer John Ferriola said Tuesday. The company has breathing room to expand thanks to the success of trade cases, but its strategy isn’t dependent on the cases advancing.
“We have a strategic plan for profitable growth that we are going to act on,” Ferriola said in an interview at Bloomberg’s headquarters in New York. “Certainly, the trade cases help our profitability.”
The shares of Charlotte, North Carolina-based Nucor have climbed 19 percent this year as demand increased and the U.S. implemented anti-dumping measures on steel imports from countries including China. At the same time a benchmark of U.S. steel prices surged 35 percent, helped in part by the trade cases.
Last month the U.S. Commerce Department found subsidies on China cut-to-length plate and dumping margins on imports of stainless steel sheet and strip in preliminary determinations, adding to the final determinations of corrosion-resistant, cold-rolled steel and hot-rolled steel products previously announced by the department and the International Trade Commission.
Ferriola said companies continue to try to evade anti-dumping and countervailing duty orders, but there are more tools to go after violators. He noted specifically the Enforce Act, which includes new U.S. regulations that make it easier to find parties cleverly circumventing the laws.
Nucor said last month that its earnings prospects may improve further as more trade cases conclude. The company said it expected third-quarter earnings will increase because of the positive impacts of lower flat-rolled steel imports, rising steel prices and “robust” demand for cold-rolled and galvanized sheet products.
Capacity utilization, which measures the amount that U.S. plants are in use, has climbed 14 percent this year as demand increased and companies regained market share from overseas producers.
Ferriola said that while the company has grown organically, it’s open to acquisitions.
“We believe that investment in our existing facilities always gives us the best return,” Ferriola said. “Acquisitions are great opportunities to get into new business we aren’t into today or supplement new products business that we aren’t into.”
Ferriola said he doesn’t favor either Democratic presidential candidate Hillary Clinton or Republican Donald Trump, but he hopes whoever wins the election will follow through on pledges to implement infrastructure projects during the next administration.
He called 21st Century infrastructure essential to a robust economy and criticized the current state of affairs in the U.S.
“It’s embarrassing,” Ferriola said, mentioning as examples Manhattan’s West Side Highway and aging bridges. “Anyone who wants to argue whether it’s crumbling in this country just needs to look.”