Friday, April 23, 2010

Nucor (NYSE:NUE) CEO Concerned with Steel Overcapacity

The CEO of Nucor (NYSE:NUE), Dan DiMicco, said recently he has concerns over Severstal, US Steel (NYSE:X) and ArcelorMittal (AMS:MT) (NYSE:MT), as they restart blast furnances in the US which will add approximately 8 million short tons of capacity to the market.

DiMicco stated, “We have serious concerns that capacity being brought back will get ahead of the demand in the marketplace because the economy isn’t really growing, we are not creating jobs. We are not seeing a lot of commercial construction, nonresidential construction, so it’s a concern. And it should be a concern for everybody. And anybody that says it’s not an issue is kidding themselves or trying to kid you.”

The result of all this, if it happens, will be the drop in steel prices which would put pressure on earnings of steel companies.

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