American steel producer Nucor Corporation is planning to substantially increase its production capacity to meet the surging demand for its products due to the rebound in the automotive industry. The company said that car manufacturers have recently increased their orders for its steel products as the industry is seeing a strong recovery following the global pandemic.
The North Carolina-based company's chief executive officer, Leon Topalian, mentioned during a CNBC interview Thursday that it expects to exceed its 2019 production rates this year to keep up with demands. He added that Nucor will be shifting much of its production capacity to manufacture more of its automotive products.
"We're about 1.6 million tons a year of our products going to automotive. Will double that in the next several years. (We) Want to be at the 3 million range," Topalian said during the interview.
Demand for the company's steel products, which include steel sheets, cold-finished steel and engineered bars, decreased during the first few quarters of 2020 after automakers were forced to shut down their factories and showrooms due to the pandemic. Auto sales slowly rebounded by the third quarter and automakers swiftly began to boost their inventories and deliveries.
Nucor released its third quarter earnings results Thursday. Its better-than-expected earnings managed to increase its stock prices up by 3% during the day's trading. Nucor's shares closed at $49.90 per share at the end of the day.
Since the start of the year, Nucor's stock prices have dropped by 11%. The stock's closing price Thursday was its highest since February before the pandemic hit the United States' economy. Since it bottomed out by more than 80% in March, Nucor's stock prices have since rebounded.
For its third quarter, Nucor reported earnings of 63 centers per share on revenues of about $4.9 billion. This was 10% lower when compared to revenues generated by the company over the same period last year. Topalian said during the company's earnings call that it still expects to give shareholders "significant returns" this year despite the economic impact of the pandemic.
