Nucor Complains About Imports; Steel Sector Sells Off
Steel makers' shares fell broadly Thursday after Nucor Corporation (NYSE: NUE) said higher imports of cheaply priced Chinese imported steel will result in lower-than-expected first quarter profits.
Pittsburgh-based Nucor is the world's 14th-largest steel maker, just behind United States Steel Corporation (NYSE: X).
"The exceptionally high level of imports flooding the domestic market" will result in lower prices and narrower margins, Nucor said.
U.S. Steel last week cited "a high level of imports and unfairly traded products" in a plan to temporarily idle its Minnesota ore operations effective May 13.
The steel-sector sell-off gave back gains from a rally Wednesday, perhaps touched off from an outlook offered by the much smaller Steel Dynamics, Inc. (NASDAQ: STLD).
Steel Dynamics said imports will decline in the second half of 2015 as domestic steel prices fall to a competitive level. The company predicted improving profits as a result.
But in what may be a prelude to an anti-dumping complaint to the International Trade Commission, U.S. steelmakers plan to meet with the Congressional Steel Caucus later this month, according to The Wall Street Journal.
As demand in China slows, its steel mills haven't cut production but have instead flooded the U.S. market. China's steel exports rose 63 percent to 9.2 million tons in January from a year earlier, according to the Journal.
Nucor shares were off 5 percent recently to $46.80; U.S. Steel and Steel Dynamics each dropped nearly 4 percent to $22.68 and $19.49 respectively. ArcelorMittal SA (NYSE: MT) fell 3.5 percent to $9.95 and the exchange-traded fund Market Vectors Steel Index (NYSE: SLX) was off 2.6 percent at $31.32.
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