U.S. steelmaker Nucor Corp (NUE.N) forecast a drop in first-quarter earnings per share on Thursday, and said its mills have not seen the seasonal improvement they usually do in the first quarter.
The forecast fell short of analysts' estimates, and Nucor's shares fell 1.2 percent.
But Morningstar analyst Bridget Freas said it was consistent with Nucor's comments in January, when the company said first-quarter earnings would be below those in the fourth quarter.
Nucor's business usually picks up in the first quarter as the construction season kicks off, Freas said. But this year is different. Several U.S. steel producers have announced price increases, yet benchmark prices have languished.
"That just kind of implies that steel buyers are saying, forget it - you can announce whatever you want, but I'm only going to buy at this price, because I know that I can, because there's plenty of competition out there," said Freas.
Imports have boosted competition for the U.S. steel industry and Nucor said imports and "general economic and political uncertainty" continue to weigh on its business.
Hot-rolled coil prices, as estimated by The Steel Index, which collects data on the market, have fallen 6.1 percent this year to $605.20 per metric ton (1.1023 tons) .HRC-USD=SI.
CRT Capital Group analyst Kuni Chen said Nucor's forecast was below his expectations, partly because of weak performance in Nucor's downstream steel products and raw materials segments.
Nucor said its downstream steel products business has seen a seasonal slowdown and it expects "a modest loss" in that segment. The raw materials unit was hit in part by an unexpected 18-day outage at a facility in Trinidad.
The Charlotte, North Carolina-based company said its steel mills' operating performance was flat compared with the fourth quarter of 2012, as weaker results in sheet steel offset better profits from structural steel.
"My view was that the seasonal uptick was going to be muted because earlier attempts to raise steel pricing in the year had faded," said Chen. "I think it's a bit of a negative. Usually you can count on this seasonal uptick year in and year out, but it was certainty unusually muted this year."
Nucor said it expects earnings to fall to between 20 and 25 cents a share, from 46 cents a year earlier. The previous year's results were boosted by a 4 cent a share tax gain.
Analysts, on average, had been expecting earnings of 36 cents a share, according to Thomson Reuters I/B/E/S.
Shares fell 1.2 percent to $45.98 on the New York Stock Exchange.
(Reporting by Allison Martell in Toronto; Editing by Gerald E. McCormick)