Nucor Corporation (NUE), AK Steel Holding Corporation (AKS) & Steel Dynamics, Inc. (STLD): What the Steel Players Have to Say Now

Looking ahead, the combination of lower maintenance outage costs, declining raw-material costs (i.e., iron ore), and recent improvements in spot prices each suggest results should improve nicely in the coming quarters. As a result, the forward-looking estimates still appear reasonable, particularly relative to some of the steel peers.

Steel Dynamics blames weak pricing for the miss

Steel Dynamics, Inc. (NASDAQ:STLD) concluded quarterly pre-announcement season for the steel producers with a disappointment, indicating it expects to earn between $0.10 and $0.14 per share in Q2 vs. consensus of $0.23. Steel Dynamics, Inc. (NASDAQ:STLD) indicated it expected Q2’13 shipments to be slighter higher sequentially.

However, weak pricing in sheet and structural steel will more than offset the volume improvement, resulting in reduced earnings for the company’s steel operations. Also, the company expects weaker results in its metals recycling business and expects its fabrication operations to remain profitable in 2Q.

Steel Dynamics, Inc. (NASDAQ:STLD) indicated that uncertainty in the domestic economic environment continues to suppress consumer confidence and customer buying. Steel Dynamics, Inc. (NASDAQ:STLD) flagged that the “residential construction market is stronger, and market optimism remains in place for improvement in non-residential construction demand.” Although once again the optimism on construction demand was due to “modest increases in key directional indices” rather than substantive indications of improving company-specific order books.

Final word

The recent round of announcements related to performance in the second quarter suggests that a recovery in the steel sector remains far from reality. Even, improvement in construction demand hasn’t been able to turn the tables for this sector that, for long, has seen its profitability being plagued by the overwhelming issue of overcapacity. Among the names in the industry, AK Steel Holding Corporation (NYSE:AKS) looks the best given its overdone sell-off and modest future estimates.

The article What the Steel Players Have to Say Now originally appeared on Fool.com.

Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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