U.S. Steelmakers Earnings Leave Investors Pondering Peak Prices

Two of the largest U.S. steelmakers posted record quarterly profit that easily beat analysts’ estimates during the greatest steel rally in a generation.

Yet investors clearly favor Nucor Corp.’s upbeat expectations for the rest of the year over Cleveland-Cliffs Inc., which disclosed Thursday that earnings ahead may be a little less than the market expects.

Nucor’s stock rose as much as 1.6% while Cliffs shares plunged as low as 7.6% following their second-quarter earnings reports. The quarter set a new benchmark for profits by the metal makers amid a generational rally that has boosted benchmark domestic steel prices more than 75% this year. Nucor, the largest U.S. producer, and Cliffs, the second largest, said they expect to extend the record streak into the next quarter, following a similar prediction earlier this week by Steel Dynamics Inc.

“We expect to set a new record for quarterly earnings in the third quarter of 2021 as demand remains robust and virtually all the steel end use markets that we monitor are growing,” Nucor Chief Executive Officer Leon Topalian said in a statement.

Cliffs, however, spooked the market with implied earnings that may be lighter than anticipated in the fourth quarter. The Cleveland, Ohio-based company provided third-quarter guidance for earnings before interest, taxes, depreciation and amortization of $1.8 billion, implying a target of $1.3 billion in the fourth quarter, according to B Riley analyst Lucas Pipes. Wall Street forecast $1.42 billion for the year’s last quarter, according to the average estimate of four analysts.

Steel Dynamics CEO Mark Millett said on Tuesday that the steel rally won’t slow in the second half of this year, and that the Fort Wayne, Indiana-based steelmaker expects another record profit in the third quarter.

Cliffs holds an earnings call with analysts at 10 a.m. New York time, while Nucor’s call begins at 2 p.m.

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