Because they understand there can be no sustainable domestic economic recovery that does not make room on the gravy train for the industrial base that built this nation, Fools have watched the steelmakers for signs that industrial demand may be on the mend.
With a comforting update -- featuring surprisingly upbeat guidance for first-quarter earnings -- steelmaker Nucor
Nucor expects to report between a $0.05-per-share loss and a $0.05-per-share gain for the first quarter. Adjusting for an anticipated $23 million LIFO charge, a portrait of marginally improving operating metrics through select segments of steel demand begins to emerge. Nucor is targeting a rather robust 20% sequential improvement in total steel shipments for the first quarter, and a 23% sequential increase in orders that sets up a remarkable 94% improvement over those paralyzed prior-year levels.
Looking to the all-important capacity utilization figures, we find persistently weak construction-related demand inserting a steel barrier between two sets of product lines with variable sensitivity to the construction markets. On the one hand, we find less construction-sensitive "flat" segments like steel sheet and plate products bouncing back quite nicely, with projected first-quarter utilization rates of 85% and 90%, respectively.
Meanwhile, although the end of last year's inventory destocking phenomenon led to a sequential improvement even in the deeply impaired structural steel segments like beams and bars, those more construction-sensitive products remain at depressed capacity utilization rates of 55% and 63%, respectively.
Fools will recall that Commercial Metals
Although "long" products like beams and bars are not along for the ride, the abrupt improvement in demand for flat products must not be overlooked as a positive indicator of some improvement in American manufacturing activity. For domestic raw-material suppliers like Cliffs Natural Resources
Providing a symbolic domestic counterpoint to POSCO's
Which domestic steelmaker will you choose as your steely wager for eventual recovery in the U.S. industrial sector? Please nominate your favorite in the comments section below, and cast your official vote by joining Motley Fool CAPS and adding your pick to your CAPS portfolio.
Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly in the Motley Fool CAPS community under the user name TMFSinchiruna. He tweets. He owns no shares in the companies mentioned. POSCO is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a stainless disclosure policy.