Nucor Corporation‘s (NUE – Free Report) board has approved the construction of a galvanizing line at Nucor Steel Berkeley in South Carolina. The $425 million investment is expected to create more than 50 new full-time jobs. It will also support the company’s strategy to expand its capabilities and increase participation in the automotive and consumer durables markets. The start-up of the galvanizing line is expected in mid-2025.
The company’s board also approved a galvanizing line to be built in the western United States. It plans to announce the details at a future date. These investments are in sync with the company’s strategy of shifting its mix to higher margin value-added products.
Nucor, which is a prominent player in the steel space along with Steel Dynamics, Inc. (STLD – Free Report) , United States Steel Corporation (X – Free Report) and ArcelorMittal S.A. (MT – Free Report) , said that the new galvanizing line in South Carolina will have an annual capacity of roughly 500,000 tons. It will be able to produce galvanized steel up to 72 inches wide.
The company, last month, announced that it will invest $200 million over a five-year period in mill modernization projects at its Nucor Steel Berkeley division in South Carolina. The investment will include the construction of a new air separation unit for supplying industrial gases for the mill’s steelmaking operations.
Nucor operates five strategically located sheet mills that uses thin slab casters to make flat-rolled steel for automotive, appliance, construction, pipe and tube, and other industrial and consumer applications. The current capacity of its sheet mills is estimated at around 13 million tons annually. A sixth sheet mill is currently under construction in West Virginia. The company also has majority stake in California Steel Industries as well as a joint venture automotive galvanizing line in Mexico.
Nucor recently issued its guidance for the third quarter of 2022. It projects third-quarter earnings to be between $6.30 and $6.40 per share. This suggests a decline from $9.67 per share in second-quarter 2022 and $7.28 per share in the year-ago quarter.
The company expects earnings to decline significantly in the steel mills segment on a sequential comparison basis in the third quarter. The expected decline is due to metal margin contraction and lower shipment volumes, especially at its sheet and plate mills.
Nucor expects its steel products segment to deliver another strong quarter, with earnings roughly in-line with second-quarter 2022. Earnings for the raw materials unit are forecast to be flat on a sequential comparison basis in the third quarter. The company continues to believe that 2022 will be the most profitable year in its history.