Nucor Corp. sees room for growth in supplying the automotive industry with steel products, management of the North Carolina-based company said on an Oct. 22 earnings call.
"If you think about our opportunities here, automotive is the largest sheet user in the United States," Mary Emily Slate, a Nucor executive vice president, said on the call. "They use about 33% of the sheet market. And we have grown our footprint there, but we have a tremendous amount of opportunity."
Weighing in on the potential in the sector, Nucor President and CEO Leon Topalian said automotive customers have told company management they want the steelmaker to expand in the sector. While Topalian said Nucor would focus on having a balanced steel portfolio in terms of the industries it supplies, the executive suggested Nucor's sales to the automotive industry could expand considerably.
"Today, we're about 1.5 million, 1.6 million tons a year that go into the automotive sector," Topalian said. "And we think around 2.5 million to 3 million tons is about the right balance for us."
Topalian noted that U.S. steel inventories remain low amid restocking by manufacturers, as have others in the sector.
Commenting on steel demand from other sectors, Topalian said rig counts and commodity prices in the oil and gas end-use markets remained low, while demand from the renewable energy sector was increasing. To the end of September, orders from the renewable energy industry were 15% higher than in 2019, Topalian said.
During the call, Topalian also touched on the upcoming U.S. election, expressing hope that political leaders in Washington will focus on infrastructure spending, which would benefit heavy industries such as steel.
"We believe that a long-term commitment to modernizing our nation's crumbling infrastructure is long overdue," Topalian said. "And we will continue to remind our elected officials of this when the new Congress convenes in 2021."
Topalian also pointed to a potential silver lining in the economic impact of COVID-19 for steelmakers, saying it appears that some consumers may be shifting money away from travel budgets to vehicle upgrades.
In the third quarter, Nucor's attributable earnings dropped to $193.4 million from $275.0 million the year before, while net sales fell 10% to $4.93 billion.