[SMM Global Steel Enterprise Special Report] A Detailed Analysis of US "Steel King" Nucor: 100% Electric Arc Furnace Forging High Profits, Vertical Integration Mitigating Cost Fluctuations Nucor Corporation is a company incorporated in Delaware in 1958. The company and its subsidiaries are engaged in the manufacture of steel and steel products. It also produces and procures ferrous and non-ferrous metal materials, primarily for use in its steelmaking operations. Most of its operating facilities and clients are located in North America. Its operations include international trading and sales companies responsible for buying and selling steel and steel products manufactured by the company and others. Nucor is also the largest recycler in North America, using steel scrap as the primary raw material for producing steel and steel products. In 2025, it recycled approximately 20 million gross tons of steel scrap. Operating Performance Data source: Nucor Corporation Annual Report、SMM Reasons behind the performance changes: ① Decline in gross profit: The primary reason for the decline in gross profit in 2025 was the compression of profit margins in the steel products segment. Due to lower average selling prices, gross profits from the grating and decking, building systems, and rebar fabrication businesses under this segment all experienced significant declines. ② Steel mill segment growth: In contrast, gross profit in the steel mill segment increased, primarily driven by higher sales and improved steel industry spreads. ③ Investment expenditures: Over the past three years, Nucor invested approximately $9.73 billion in capital expenditures and acquisitions, aiming to expand its product portfolio and enhance operational flexibility. Segments, Major Products, and Marketing Nucor reports its results in three segments: the steel mills segment, the steel products segment, and the raw materials segment. The steel mills segment is Nucor's largest segment, accounting for 62% of the company's sales to external clients for the fiscal year ended 2025. It primarily sells its products to steel service centers, manufacturers, and fabricating enterprises located in the US, Canada, and Mexico. In 2025, the steel mills segment sold approximately 19,848 kt of products to external clients. Data source: Nucor Corporation Annual Report、SMM The Steel Products segment primarily produces high-value-added downstream construction and industrial components, holding leading positions across the U.S. in multiple sub-segments including steel joists, prefabricated metal buildings, and insulated metal panels. It accounted for 29% of the Company's net sales to external clients for the year ended 2025. In 2025, total sales of major products in the Steel Products segment were approximately 1.478 million mt, including approximately 658,000 mt of steel joists and joist girders, approximately 436,000 mt of steel deck, and approximately 384,000 mt of metal building systems. Although physical sales volume (tonnage) was far below that of the Steel Mills segment, the per-mt selling price and profit margin were much higher than those of basic steel, and the segment also ranked first in market share across the U.S. in multiple areas. Data source: Nucor Corporation Annual Report、SMM The Raw Materials segment is the cornerstone of Nucor's vertical integration strategy, primarily operated through its wholly-owned subsidiary The David J. Joseph Company (DJJ), and manages DRI production facilities in Louisiana and Trinidad. By blending DRI with steel scrap, it supports electric arc furnace (EAF) production of higher-grade sheets & plates while ensuring cost advantages and supply security of raw materials. It accounted for 9% of the Company's net sales to external clients for the year ended 2025. In 2025, approximately 20 million gross tons of steel scrap were recycled and processed. Data source: Nucor Corporation Annual Report、SMM Clients and Markets Data source: Nucor Corporation Annual Report、SMM Major Development Projects in Recent Years The vast majority (91%) of Nucor's capital was allocated to internal construction (CapEx), strengthening core competitiveness through technology upgrades (such as electric arc furnaces and micro mills); a small portion was used for strategic acquisitions to achieve "outward expansion" into high-margin downstream areas. Through acquisitions such as SWDP, the company quickly entered high-barrier, high-growth sub-segments including data centers and green energy, making its business structure more resilient to cyclical downturns. Data source: Nucor Corporation Annual Report、SMM Core Logic of Vertical Integration for Cost Reduction: Raw Material Supply Structure Data source: Nucor Corporation Annual Report、SMM Core Risk Factors The greatest risk facing Nucor is a combination of internal and external challenges — internally, cost fluctuations in steel scrap and energy; externally, the impact of low-priced imported steel resulting from global (especially China's) overcapacity. Specifically: 1. Core Industry Risks ① Severe global supply-demand imbalance: Global steel surplus capacity reached 704 million net mt in 2025 (8 times US annual production). It is expected to further increase to 795 million mt by 2027. ② Regional impact: China's annual production has exceeded 1 billion mt in each of the past 8 years, and Chinese steelmakers continue to invest in new capacity in Southeast Asia and Africa. ② Import shock: This surplus leads to a flood of low-priced steel into the US market, creating significant downward pressure on Nucor's product prices, sales, and profit margins. 2. Production Cost Risks ① Steel scrap price sensitivity: Nucor uses 100% electric arc furnaces (EAF), with steel scrap being the largest cost item. Steel scrap prices fluctuate significantly and are beyond Nucor's control. ② Supply chain uncertainty: Although Nucor has achieved a degree of self-sufficiency through its DRI plants and DJJ recycling system, pig iron and iron ore pellets still rely on international procurement, facing geopolitical risks (e.g., Ukraine, Russia, Brazil). 3. Operational Challenges ① Energy-intensive nature: Steelmaking relies on large amounts of electricity (for melting) and natural gas (for heating and DRI production). ② Cost pass-through: Energy prices are affected by demand, the regulatory environment, and transmission infrastructure (pipelines/power grid), and cost surges may erode profits. 4. Compliance and ESG Risks ① Emission reduction pressure: The steel industry faces intense scrutiny due to greenhouse gas (GHG) emissions. ② Policy risk: Although Nucor's emission intensity is far lower than its blast furnace peers, increasingly stringent environmental protection laws and regulations may increase capital expenditures or restrict operations at existing facilities. 5. End-Use Market Risks ① Industry cyclicality: The steel industry is highly correlated with the macro economy. ② End-use market fluctuations: Nucor's largest market is non-residential construction. If this sector (e.g., commercial offices, industrial facilities) contracts due to high interest rates or economic recession, it will directly impact Nucor's performance severely. Copyright and Intellectual Property Statement: This report is independently created or compiled by SMM Information & Technology Co., Ltd. (hereinafter referred to as "SMM"), and SMM legally enjoys complete copyright and related intellectual property rights. The copyright, trademark rights, domain name rights, commercial data information property rights, and other related intellectual property rights of all content contained in this report (including but not limited to information, articles, data, charts, pictures, audio, video, logos, advertisements, trademarks, trade names, domain names, layout designs, etc.) are owned or held by SMM or its related right holders. 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【SMM Steel】The US Department of Commerce issued a final determination in its countervailing duty administrative review, finding that POSCO Co., Ltd. received countervailable subsidies on carbon and alloy steel cut-to-length plate exports to the US during the January 1, 2023 to December 31, 2023 review period, with a final subsidy rate of 3.70%. The rate applies to POSCO's cross-owned entities and its affiliated trading company POSCO International. The determination comes as the US Court of International Trade has remanded certain key issues, requiring Commerce to provide better substantiation on electricity pricing benchmarks and whether carbon allowances constitute "financial contributions". US steelmaker Nucor has appealed the trade court's ruling.

Leading US steel producers, including Nucor, Gerdau, and Optimus Steel, have announced a general price increase for rebar by $20 per short ton ($1.00 per cwt), effective immediately in May 2026. This move follows a period of price consolidation and is largely driven by rising raw material costs, particularly ferrous scrap, and sustained demand from domestic infrastructure projects. The hike brings the market price floor higher, signaling a shift toward a more hawkish pricing environment in the North American long products sector. If successfully absorbed by the market, this increase may prompt other regional mini-mills to follow suit, potentially raising construction costs across the US in the second quarter of 2026.

[SMM Steel] Nucor Corporation reported record quarterly steel shipments of 7.4 mln short tons in Q1 2026, up 8.7% YoY, marking the highest level in its history. Orders also reached 4.7 mln short tons, the strongest since Q2 2021. The performance reflects solid mill execution and contributions from new capacity, alongside strong demand from data centers and the energy sector. Nucor expects full-year shipments to grow by over 5%, supported by favorable demand conditions and ongoing trade protection measures.

SMM News Flash: [U.S.] Nucor has raised its hot-rolled coil (HRC) offer by 10 USD/tonne to 1,065 USD/tonne, while California Steel Industries (CSI) is offering at 1,115 USD/tonne. This round of increases is driven by tight spot supply, as maintenance outages and delivery delays have limited availability. Lead times remain at 3–5 weeks, but buyers are finding it increasingly difficult to secure material and are relying more on limited spot resources, which continues to support stronger prices.

【SMM Steel】The USDOC initiated a circumvention inquiry into CORE finished in Thailand, investigating whether it uses S.Korean-origin steel to bypass AD/CVD orders on S.Korea. The probe was requested by Nucor and Steel Dynamics. Current AD rates on S.Korea range 8.75-47.80%; CVD rates 0.72-1.19%. The move aims to protect domestic manufacturers.

The United States has maintained a restructured trade regime as of March 2026 that places an effective tariff rate of 41.1% on imported steel and aluminum products. This high rate reflects the combination of Section 122 global tariffs and existing Section 232 duties, which have significantly tightened domestic supply and allowed major US mills like Nucor and Cleveland-Cliffs to command significant premiums. While Canada and Mexico maintain exemptions under USMCA, the broader policy has raised costs for manufacturers relying on specialized alloys not produced locally.

[SMM Steel] Nucor expects Q1 2026 earnings to increase modestly versus Q4 2025, with the Steel Mills division seeing the largest improvement. The company also anticipates better performance in its raw materials segment, while steel products earnings are expected to remain broadly stable. Pricing pressure continues to challenge North American producers, indicating profitability is increasingly driven by pricing discipline and value-added product mix.

【SMM Steel】The USDOC initiated a country-wide circumvention probe into corrosion-resistant steel from Indonesia at the request of Steel Dynamics and Nucor. They allege finished products use Chinese HRC/CRC and Vietnamese CRC to bypass AD/CVD orders. If processing is found minor, AD/CVD on Chinese/Vietnamese goods will apply. A preliminary ruling is due within 150 days.

Spanish stainless steel giant Acerinox S.A. has seen a surge in interest from US investors following resilient earnings and a confirmed dividend strategy. As the parent company of Kentucky-based North American Stainless (NAS), Acerinox is being positioned as a strategic "sleeper play" for its exposure to high-value special alloys critical to EV supply chains, data centers, and industrial reshoring. While the company remains a traditional cyclical player, its shift toward high-margin specialty products and a disciplined capex approach has allowed it to maintain solid EBITDA despite weak European demand. For US portfolios, it offers a diversified global alternative to domestic names like Nucor or Cleveland-Cliffs.