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Nucor (NUE -6%) and Steel Dynamics (STLD -5%) both guided Q3 EPS below analyst expectations, surprising investors given that Q3 is seasonally important for steelmakers as warmer weather typically supports higher shipments and stronger demand from nonresidential construction, infrastructure, and related fabrication. While the cautious outlooks may temper near-term enthusiasm, both companies pointed to higher steel selling prices, with STLD also expecting lower scrap costs. The setup remains constructive for domestic steelmakers, as tight supply, trade protection, low customer inventories, and solid end-market demand continue to support pricing even without a broad-based demand boom.

• Nucor: NUE guided to Q3 EPS of $5.55-5.65, below analyst expectations. The company expects earnings to increase in its steel mills and steel products segments but decline in raw materials. Higher average selling prices and stable volumes are expected to support the steel mills segment, partially offset by higher costs of products sold, while higher corporate/eliminations expense is also expected to weigh on Q3 results.
• Steel Dynamics: STLD guided to Q3 EPS of $5.34-5.38, also below expectations. The company expects higher average realized steel selling values combined with lower scrap costs to support results. STLD also said customer order activity remains strong, supported by solid underlying demand and persistently low customer inventories, which continue to support favorable pricing conditions.
• End markets: Steel demand remains solid across key markets, led by nonresidential construction, energy, automotive, and industrial sectors. Q3 is seasonally important for steel shipments as warmer weather supports construction activity, making the below-consensus guidance from both producers somewhat more notable.
• Pricing: The most encouraging element of the outlooks is that both companies are seeing higher steel selling prices. The US steel market remains supported by tight domestic supply and trade protection, while underlying demand is solid rather than booming. The 50% U.S. tariff on steel imports has materially reduced import competition, helping domestic producers maintain pricing power. Combined with low customer inventories and solid order activity, the current environment remains supportive of domestic steel prices and producer margins.

Briefing.com Analyst Insight

NUE and STLD delivered a notable near-term surprise by guiding Q3 EPS below expectations, particularly given the seasonal importance of the quarter for steel shipments. The cautious guidance suggests that investors should not assume that higher steel prices will immediately translate into an outsized earnings acceleration, as costs and corporate expenses remain potential offsets. However, the underlying commentary was more constructive than the headline EPS guidance suggests. Both companies are seeing higher selling prices, while STLD is also benefiting from lower scrap costs and persistently low customer inventories. With imports constrained by the 50% tariff, domestic supply relatively tight, and demand remaining solid across construction, energy, automotive, and industrial markets, the industry backdrop remains supportive.