Nucor (NUE) is the largest supplier to the nonresidential construction industry. The company is the leading rebar supplier in the US (DIA) market. Commercial Metals Company (CMC) and Gerdau S.A (GGB) are the other leading rebar suppliers in the US.
- Nucor has been increasing its presence in the automotive sector over the last couple of years. Nucor’s CEO, John Ferriola, said during the company’s 3Q15 earnings call, “The automotive market continues to be an attractive growth opportunity for Nucor. Nucor’s shipping rate into the automotive market increased by 20% in 2015 versus 2014 to a 1.4 million tons per year rate.”
- Ferriola added during the call that Nucor’s advanced high-strength steel products were “attracting a lot of interest.” The company expects its automotive shipments to increase to 2 million tons over the next few years.
- Ferriola stated, “The automotive companies are more and more appreciating the value of Nucor’s reliability, sustainability, and our financial strength.”
- AK Steel (AKS) is a major supplier to the automotive sector. However, the company’s financial health has deteriorated in the last few quarters. AK Steel has a mounting pile of debt, and circumstances have only become worse as steel market conditions have failed to improve.
- Automakers look at a steady raw material supply for their plants. Nucor could use its financial strength to its competitive advantage in winning more automotive customers.
- According to Nucor, its Gallatin plant is also “working hard to qualify for automotive products.” Last year, Nucor had acquired the Gallatin plant for its energy play. However, steel demand from the energy sector has tanked on lower drilling activity.
To learn more about the recent developments in this industry, please visit our Steel page.