Steel demand in energy renewables growing as oil, gas demand remains weak: Nucor

Strong steel demand growth from the renewable energy sector in 2020 partially offset weakness from the oil and gas markets, where lower demand trends from last year persist despite rising oil prices, Nucor Corp. CEO Leon Topalian said Jan. 28.

"Our sales to the renewable power sector have been very strong this year with steelmaking segment orders related to these markets growing by double digits compared to the 2019 total," Topalian said during an earnings call with analysts. "The renewable power market is one Nucor is targeting, and many of our steel and steel products are essential to its continued buildout."

Topalian said Nucor's use and end-production of recyclable steel positions the company as a preferred supplier for renewable energy applications given sustainability objectives.

Significant and sustained steel demand improvement in the oil industry may depend on domestic vaccination efforts to curb the spread of the coronavirus pandemic and a subsequent return to pre-pandemic commuting patterns, the executive added.

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Regarding other end markets, Topalian said strong nonresidential construction demand was expected to continue in 2021 despite contrary forecasts.

"We are aware of certain leading indicators signaling a downturn in nonresidential construction activity, but so far, we don't see much evidence of that," he said. "Our company is well positioned in attractive subsegments of the nonresidential construction market... We have worked to build relationships in these subsegments that are bright spots, ensuring that we are providing the best solutions across steelmaking and steel products to serve those customers."

Topalian said Nucor also remains "cautiously optimistic" that a substantial infrastructure spending bill will be passed by the federal government this year.

Nucor's fourth-quarter 2020 steel shipments remained mostly steady year-over-year at 5.79 million tons.

The steelmaker reported a fourth-quarter 2020 net income of $398.8 million on sales of $5.26 billion, compared with a $107.8 million net income on $5.13 billion in revenue in the fourth quarter of 2019.

For full-year 2020, Nucor posted earnings of $721.5 million on $20.14 billion in sales. The company had earned $1.27 billion on revenue of $22.59 billion in 2019.

Nick Lazzaro is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.