Nucor 1Q17 Earnings Call Notes

John Ferriola – Chairman, CEO and President

We welcome an investigation into the impact of imported steel on national security

” I have to tell you, we welcome an investigation into the impact of imported steel upon our national security, particularly given that many of these steels are imported illegally, violating our trade laws. And so we’re happy to see this. I think it was a bold move by the President. He clearly set a time frame that’s aggressive and it’s a good thing for the industry.”

Inventory levels are very low

“without a doubt, the inventory levels, as you mentioned, are extremely low. Our sheet products are about 1.8 months on hand. I can’t — frankly, I can’t remember the last time they were that low. Plate inventories are somewhere around 2.3 months on hand, also well under the normal PIV rate. And in terms of the impact or what we’re hearing as to why that’s been happening, I guess, part of it has been that the service center industries have been waiting to make sure that what they’re seeing today in the balance between supply and demand and its impact on pricing is longer term. They want to make sure that this wasn’t one of those short pops.”

Steel use per rig has doubled

“Well, if you take a look at the U.S. rig count, it’s up quite a bit. It’s currently running at about 850 rigs. That’s up from a low in the middle of last year of about 400. So the number of rigs have doubled. And as importantly, the amount of steel consumed per rig has doubled since about 2013. So when you have a situation where you’re doubling the number of rigs and the amount of steel consumed has doubled, that’s a good situation for us. And again, as I mentioned, we’re — we tend to be heavy on hot band, particularly at our Gallatin facility. And Gallatin has always been a big feeder to the OCTG. So we stand ready to supply this increased demand.”

25% of steel is imported…construction is #1 consumer of steel

“Yes. In general, I would have to agree with what you were saying. I will say, though, one point that I need to correct. You talked about basically the steel being cut off from China and Korea and some other — Turkey, some other problem areas. I need to point out that, that is a battle that we’re still fighting. If you look at the import percentage today, we’re probably still having 20% to 25% of the market share supplied by imported products, many of which are dumped products. So we continue that battle. But in general, we take a look at things and we say, “Okay, what’s — where does the steel demand come from?” And at the end of the day, when you look at the United States, construction accounts for the vast majority of steel consumed in the United States followed by automotive, okay, followed by energy.”