Wednesday, September 15, 2010

Nucor (NYSE:NUE), Steel Dynamics (Nasdaq:STLD) Lower Third-quarter Guidance

With Nucor (NYSE:NUE) and Steel Dynamics (Nasdaq:STLD) lowering their third-quarter guidance, Canaccord Genuity said it confirms the domestic steel scrap market, in relationship to flows and spreads, is slowing down for the quarter.

"Both Nucor and Steel Dynamics lowered their Q3 earnings guidance on Tuesday. For the record, Nucor expects Q3 earnings per share to be $0.05-$0.10, down from $0.29 in Q2/10. Steel Dynamics forecasts Q3 EPS of $0.05-$0.10, down from $0.22 in Q2/10," said Canaccord.

Neither Nucor or Steel Dynamics is rated at this time by Canaccord.

"This commentary confirms what we have been hearing about the domestic scrap market in the current quarter in terms of flows and spreads. As detailed in prior research, we recently lowered our Aug. (FQ4/10) quarter estimate for Schnitzer Steel (Nasdaq:SCHN), based on reduced expectations for average realized metal spreads. Also, we lowered our Sims Metal Management (NYSE:SMS) estimates for F2011 and F2012 due in part to mixed ferrous scrap demand trends and weaker scrap flows."

Canaccord rates Sims and Schnitzer at "Buy."

1 comment:

hiddenlevers said...

I’m more optimistic about the future of steel, even if we go back into recession in the US. Global demand is steady, so these guys don’t really have too much to complain about IMHO. Charting Steel prices against US GDP growth over the past year confirms this:

Take a look at how these major steelmakers do against their underlying economic lever, Steel prices:

AK Steel AKS

Nucor NUE

Steel Dynamics STLD