UPDATE 4-Steelmaker Nucor's Q3 profit up, sees stronger Q1

* Q3 EPS 57 cents/shr vs 53 cents/shr Street view

* Sales rise 3 pct to $5.25 bln

* Sees stronger orders in Q1, 2012

* Stock up 2.9 percent

By Steve James

Oct 20 (Reuters) - Nucor Corp's third-quarter profit beat Wall Street estimates and although the steelmaker sees market deterioration for the rest of this year, it expects orders to pick up early next year.

The third-quarter earnings beat and the positive outlook for the 2012 first quarter combined to send the company's stock up 2.9 percent to close at $35.91 on the New York Stock Exchange on Thursday.

President and Chief Operating Officer John Ferriola told industry analysts that Nucor expects a stronger first quarter next year as customers build up steel inventories.

"We expect the first quarter from our customer's perspective to be a stronger order entry quarter in most of our products," he said.

However, Chairman and Chief Executive Officer Dan DiMicco was blunt with his current assessment of the industry, saying over-capacity and growing foreign imports into the United States were driving down steel pricing.

In its earnings release, Nucor said markets such as automotive, heavy equipment, energy and general manufacturing have improved from 2010 but have shown "very little improvement" from the first half of 2011.

"We have seen only minimal improvement in non-residential construction markets and expect to see only slight improvement in demand through the end of 2011," Nucor said.

"We expect further margin compression in the sheet market in the fourth quarter," it said. "As a result, we expect our overall earnings to be lower than the third quarter."

DiMicco, an outspoken critic of China's trade policies, also called on Congress to pass a proposed currency exchange rate oversight reform act.

"This legislation is exactly the kind of strong and bipartisan action our government must take to hold China accountable for its protectionist trade policies.

"China's failure to engage in rules-based trade, a commitment it agreed to when it became a member of the World Trade Organization and achieved favored nation trading status in the United States, has destroyed millions of good paying American jobs," said DiMicco.

Analyst Luke Folta of Jefferies & Co said Nucor's beating of lowered Wall Street estimates was "unsurprising," given that the company had warned last month of reduced expectations.

"The fourth-quarter outlook was largely anticipated as pressure on flat-rolled (steel) has been well publicized.

"We have been picking up on the (weak) demand stuff, but the biggest contributor (to a lower earnings forecast) is metal spreads in flat-rolled -- the difference between their prices and cost of raw materials," Folta said.

Net third-quarter earnings were $181.5 million, or 57 cents per share, up from $23.5 million, or 7 cents per share, a year earlier, the Charlotte, North Carolina-based company said. Sales rose 3 percent to $5.25 billion.

Analysts on average were expecting earnings of 53 cents per share, according to Thomson Reuters I/B/E/S.

But those estimates had been lowered from 66 cents per share last month, after Nucor forecast lower-than-expected third-quarter earnings. At the time, the company blamed rising supplies for depressing prices for sheet metal in the United States during the quarter.

Nucor said on Thursday that while third-quarter earnings exceeded those of last year's quarter, they declined from the second quarter of this year on lower steel prices and significantly lower metal margins.

Nucor had posted a second-quarter profit of $299.8 million or 94 cents per share.

Average sales prices per-ton increased 24 percent over the 2010 third quarter, but decreased slightly from the second quarter of this year.

Total steel shipments to outside customers were 5,785,000 tons in the third quarter -- an increase of 3 percent over both the second quarter of 2011 and the third quarter of 2010.