Steelmaker Nucor Corporation (NUE) has contracts with Vale SA (VALE), Samarco and Iron Ore Co of Canada to supply iron ore, which feed Nucor’s 2-million-ton-a-year DRI mill in Trinidad and Tobago.
The St. James Parish, Louisiana direct-reduction-iron, or DRI unit, is expected to group the DRI units in two plants with the capacity to produce 5.5 million tons (4.99 million tons) of sponge iron a year, requiring an investment of $3 billion.
In March 2011, Nucor set up shop in Louisiana attracted by plentiful natural gas supplies available close by. Nucor also offered the prospect of creating thousands of jobs by providing a reliable energy source for domestic manufacturing.
The St. James Parish facility is expected to group the DRI units in two plants with the capacity to produce 5.5 million tons (4.99 million tons) of sponge iron a year, requiring an investment of $3 billion.
The company recently reported a stupendous increase in profit to $190.8 million or 56 cents per share (excluding special items) in the first quarter of 2011 from $55 million or 15 cents per share (excluding special items) in the same quarter of 2010.
With this, the company also surpassed the Zacks Consensus Estimate by 21 cents per share and its own guidance of 30 cents–35 cents per share.
Consolidated sales surged 32% to $4.83 billion due to a 22% increase in average price per ton and a 9% rise in shipments (to 6.0 million tons) to outside customers. It was higher than the Zacks Consensus Estimate of $4.43 billion.
Steel mill shipments grew 10% to 5.2 million tons during the quarter. The average scrap and scrap substitute cost per ton gained 33% to $424.
Nucor expects results in the second quarter to improve over the first quarter, despite some market weakness that may impact results at the end of the second quarter.
Further, the company continues to see slow but steady improvement in real demand in certain end-markets.
The most challenging markets for its products are associated with residential and non-residential construction. The company retains a Zacks #3 Rank on its stock, which translates into a short term rating of Hold in the short term.
It competes with United States Steel Corporation (X) and Sumitomo Metal Industries (SMMLY).
NUCOR CORP (NUE): Free Stock Analysis Report
VALE RIO DO-ADR (VALE): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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