Nucor’s (NUE) side-bet on natural gas looks to be a loser, as the steel company called a halt to its natural-gas project with Encana (ECA) today.
Reuters Bloomberg details impact of that decision:
The move will reduce Nucor's 2014 capital expenditure by about $400 million, the Charlotte, North Carolina-based company said in a statement today. In July it had forecast spending of $1.1 billion next year…
Nucor also said today it will earn 35 to 40 cents a share in the fourth quarter, compared with 43 cents a year earlier. The average of 18 estimates compiled by Bloomberg was for profit of 40 cents. Nucor's projection includes 6 cents per share of inventory expenses, compared with a 14-cent credit a year earlier, the company said.
The news has hit Nucor’s shares today. Its stock has dropped 1.4% to $51.30, even as U.S. Steel (X) has gained 0.3% to $27.20, AK Steel (AKS) has gained 1.2% to $6.10 and Steel Dynamics (STLD) has decline 0.1% to $18.95. Encana is little changes at $17.95.
Citigroup’s Brian Yu explains that the earnings announcement is good news for AK Steel, U.S. Steel and Steel Dynamics:
As expected, the company noted improved profitability from their sheet unit, despite the three week planned outage at their Berkeley County mill, due to a series of price hikes. Bar and structural mills saw weaker performance in 4Q due to planned outages for upgrades at their SBQ mill in Norfolk and structural mill in Blytheville. NUE's comments and guidance have positive implications for sheet producers AKS and X as well as STLD.
Shares of Nucor have gained 19% this year, while US Steel is up 14%, AK Steel has risen 33% and Steel Dynamics has advanced 38%.
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