What market position do rivals of NUCOR occupy in the steel

What market position do rivals of NUCOR occupy in the steel industry?

Solution

Nucor is the world\'s 4th largest steel producer by market capitalization. The rankings are: 1) POSCO (PKX) 2) ArcelorMittal (MT) 3) Gerdau S.A. (GGB) 4.Nucor (NUE) 5. US Steel (X). Over the last 5 years, Nucor (NUE) stock has returned 123.21%, outperforming both US Steel (X) and ArcelorMittal (MT) but underperforming POSCO (PKX) and Gerdau S.A. (GGB). ^[1]

Due to the extreme consolidation of the steel industry, and monopolistic industry conditions, major steel producers did not cut their prices much in response to lower demand in recent years. Nucor\'s decline in net sales was primarily attributable to selling less steel, and not lowering prices. Major steel producers do not like cutting prices, because increasing prices back up to previous levels tends to create a demand drag during a recovery. Also, the long-term nature of big-steel contracts encourages steel companies to inhibit steel price volatility.

Scrap steel prices are influenced heavily by international demand, especially by a currently flourishing China; record international demand has driven scrap steel prices to historic highs, along with overall steel prices. The steel industry has experienced unprecedented success during the past five years due to this increased demand, but also faces turbulence in the domestic economy, includingtrouble with the domestic automobile makers and problems in the housing construction industry, both of which are key steel customers.