Nucor profit miss, steel market oversupply worries dent shares

(Reuters) - Nucor Corp NUE.N posted a quarterly profit short of analysts' forecasts on Thursday and investor concerns that the U.S. steel market may be grappling with oversupply, undermining President Donald Trump's tariffs on imported steel, sent the company's shares lower.

Shares of the largest steel producer in the United States fell as much as 3.7 percent to $56.91, as a dip in steel shipments from the second quarter put investors on alert that the market may be oversupplied.

“There appears to be too much inventory in the channel right now, and this has impacted mill orders and volumes in early fourth quarter,” Longbow Research analyst Chris Olins said.

Nucor posted a profit that nearly tripled in the third quarter as a strong economy and the 25-percent tariff imposed in March boosted shipments and drove prices for its steel 23 percent higher.

The imposition of the tariffs on steel imports raised futures prices for U.S. hot-rolled coil steel .HRCc1 from $660 a ton in January to $924 at the start of June, but they have since fallen back to $834.

“Hot rolled coil prices continue to grind lower and our channel checks suggest large size orders at $800/ton or below,” said Credit Suisse analyst Curt Woodworth, who has previously downgraded the sector on concern over a glut in U.S. supply.

Nucor, which makes and distributes sheet steel, beam blanks and bar steel for a wide range of industries, also warned that its fourth-quarter earnings may be lower than the third quarter because of seasonality, but said that it sees sustainable strength in end markets.

The Trump administration went ahead with tariffs on aluminum and steel imports on March 23, but exemptions for Canada, Mexico and the European Union were only removed in June, and should continue to boost U.S. producers.

But analysts worry that the Nucor’s investments in new production plants, including a $240 million rebar mill in Florida, and other steelmakers’ plans to ramp up capacity will exacerbate oversupply.

Net sales at the Charlotte, North Carolina company rose to $6.74 billion from $5.2 billion, beating estimates of $6.63 billion.

Net income attributable to shareholders rose to $676.66 million in the third quarter ended Sept. 29 from $254.85 million a year earlier.

Excluding items, the company earned $2.33 per share, short of estimates of $2.35, according to data from Refinitiv.

Nucor shares pared losses in afternoon trade and were down about 2 percent to $58.04. They are down 7.5 percent this year.

Reporting by Rachit Vats in Bengaluru; Editing by Anil D’Silva, Bernard Orr