Steeling for a Fall: Steel Companies' 4Q15 Guidance
(Continued from Prior Part)
Industry outlook
Previously in this series, we looked at steel companies’ 4Q15 earnings guidance. Now, we’ll explore what different steel companies have to say on the current operating environment and industry outlook.
Nucor
Nucor (NUE) sounded positive on the steel industry’s 2016 outlook. According to Nucor, “although the trade remedy process has not moved as quickly as we would like, we believe that preliminary antidumping and countervailing duties and affirmative critical circumstances findings in the steel sheet cases should have a positive impact on domestic sheet mills in the first half of 2016.”
It’s important to note that US (DIA) steel companies, including U.S. Steel Corporation (X) and AK Steel (AKS), see steel imports as their biggest challenge. US steel companies expected anti-dumping duties on imported steel products to be a big boost to the domestic steel industry. However, the US steel industry’s woes now go beyond steel imports. You can read Can Trade Cases Rescue the US Steel Industry? to explore more.
Steel demand
According to Nucor, “nonresidential construction markets, although improved from 2014, are beginning to slow mainly due to seasonal factors. Energy, heavy equipment and agricultural markets remain weak. The automotive market remains strong.”
Steel Dynamics also shares the same views on end markets. According to Steel Dynamics (STLD), “the heavy equipment, agricultural and energy markets remain challenged, while the automotive market remains strong and the construction market continues to improve.”
US automobile sales have been buoyant, as shown in the graph above. However, if the Fed continues its tightening cycle in 2016, we could see some negative impact on US auto sales. Lower interest rates have been one of the factors fueling US car sales.
You can read ‘Tis the Season to be Worried: Steel in the Wake of the Hike to find out how the rate hike might impact the US steel industry.
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