Group 1 - Steel stocks surged following the announcement of increased tariffs on steel and aluminum from 25% to 50% by the Trump administration, with Cleveland-Cliffs shares rising approximately 26% [1] - Other steel companies also experienced significant stock price increases, with Steel Dynamics and Nucor shares jumping around 11% and 10.5% respectively [1] - The announcement was made during a rally at a U.S. Steel factory, coinciding with the potential union between U.S. Steel and Nippon Steel, which Trump assured would not involve layoffs [2][3] Group 2 - The increase in tariffs is expected to raise the price of U.S.-made steel, benefiting companies like Cleveland-Cliffs, Steel Dynamics, and Nucor, with benchmark steel prices rising from $725 per metric ton to $875 per metric ton since Trump took office [4] - Cleveland-Cliffs has faced challenges, including a failed acquisition attempt of U.S. Steel and a lowered full-year guidance due to higher costs and lower demand perceptions [6][7] - Analysts indicate that Cleveland-Cliffs is more highly leveraged compared to its peers, making its stock more sensitive to fluctuations in steel prices [7] Group 3 - There is uncertainty regarding the permanence of the 50% tariff level, with potential countermeasures from the European Union in response to the U.S. tariff increase [8] - The administration may seek trade deals after a 90-day tariff pause, and if tariffs become an obstacle, there is a possibility of reverting to the previous 25% rate [8] - Investors are advised to consider less-leveraged companies like Nucor and Steel Dynamics for exposure to the steel industry, as Cleveland-Cliffs may be adversely affected if tariffs are reduced [8]

Market Overview - US stock indices opened lower on Monday, with the Dow Jones down 0.43%, Nasdaq down 0.25%, and S&P 500 down 0.30%. The Dow Jones index fell below 42,000 points, closing at 41,964.54, down 0.72% for the day [1] Manufacturing Sector - US factory activity has contracted for the fourth consecutive month in May, with the ISM manufacturing index decreasing by 0.2 percentage points to 48.5. The import index dropped to its lowest level in 16 years, down 7.2 points to 39.9, marking one of the largest monthly declines on record [3] - The export index reached a five-year low, potentially reflecting retaliatory tariffs imposed by other countries on US producers. The supplier delivery index rose to its highest level since June 2022, indicating extended delivery times [3] - The report highlighted the impact of increased tariffs on demand, with new orders shrinking for the fourth consecutive month and backlogs decreasing at the slowest pace since September 2022 [3] Steel Industry - Steel stocks saw significant gains, with Cleveland-Cliffs up 23.3%, Steel Dynamics up 12.5%, and Nucor up 13.5%. This surge followed President Trump's announcement to raise the import tariff on steel from 25% to 50% [3] Biopharmaceutical Sector - BioNTech shares rose by 12.3% following a $11.1 billion collaboration agreement with Bristol-Myers Squibb. Blueprint Medicines experienced a 26.3% increase after agreeing to be acquired by Sanofi for approximately $9.5 billion [4]

Core Viewpoint - The article discusses the recent performance of the U.S. stock market, particularly focusing on the decline of major indices and the impact of U.S. tariffs on steel and aluminum imports, which has led to significant gains in the steel and aluminum sectors. Market Performance - On June 2, the three major U.S. stock indices opened lower, with the Dow Jones down 0.5%, S&P 500 down 0.25%, and Nasdaq down 0.05% [1] - Specific stock performances include Tesla dropping nearly 3% due to poor sales in Europe [1][8] Steel and Aluminum Sector - Following President Trump's announcement to increase tariffs on imported steel from 25% to 50%, steel and aluminum stocks surged, with Century Aluminum rising over 28%, Cleveland-Cliffs up over 21%, and Nucor and Steel Dynamics both increasing over 10% [5][6][7] - The market response indicates a strong bullish sentiment in the steel and aluminum sectors due to the tariff hike [5] Tesla's Sales Performance - Tesla's sales in Europe were notably poor in May, with France experiencing a 67% drop, marking the lowest sales level in nearly three years. Other countries like Portugal, Denmark, and Sweden also reported significant declines in sales [8][9] - As of the latest trading session, Tesla's stock price fell by 2.69%, contributing to a year-to-date decline of 16% [9] Technology Sector Performance - In the technology sector, Nvidia rose by 1%, while Apple saw a slight increase, and Meta Platforms gained over 1%. Conversely, Amazon and Microsoft experienced minor declines, with Google down 1.59% [10][11]

Core Viewpoint - Cleveland-Cliffs Inc (CLF) and Steel Dynamics Inc (STLD) shares are experiencing significant gains following President Trump's announcement to double steel tariffs to 50% from 25%, effective Wednesday, which adds to existing global trade tensions [1] Group 1: Stock Performance - CLF shares are up 27.8%, trading at $7.43, marking the best single-day percentage gain since 2016 and breaking a seven-day losing streak [2] - CLF's stock is recovering from a four-year low of $5.63 and is currently down 21.2% year-to-date [2] - STLD shares are up 11.3% at $136.89, reaching the highest level since December and poised for its first daily gain in four sessions [3] Group 2: Market Dynamics - STLD is on track for its best day since November, having gapped above the $40 resistance level that previously capped rallies in February and May [3] - For 2025, STLD shares show a healthy 20.1% lead [3] Group 3: Options Activity - In the options market, STLD is seeing five times the typical overall options volume, while CLF's volume is running at eleven times the intraday average [4] - The most active options contract for STLD is the June 135 put, with positions being sold to open, while for CLF, it is the June 8 call [4]

Company Overview - Steel Dynamics, Inc. is a leading steel producer and metal recycler in the United States, known for its diversified range of specialty products [11] - The company manufactures and markets steel products, processes and sells recycled ferrous and nonferrous metals, and fabricates and sells steel joist and decking products both domestically and internationally [11] Investment Ratings - Steel Dynamics is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of B, indicating a solid position but not a strong buy [12] - The company has a Value Style Score of B, supported by attractive valuation metrics such as a forward P/E ratio of 12.31, which may appeal to value investors [12] Earnings Estimates - In the last 60 days, five analysts have revised their earnings estimates upwards for Steel Dynamics, with the Zacks Consensus Estimate increasing by $0.68 to $10.18 per share for fiscal 2025 [12] - The company has demonstrated an average earnings surprise of 3.4%, indicating a positive trend in earnings performance [12] Investment Consideration - With a solid Zacks Rank and favorable Value and VGM Style Scores, Steel Dynamics is recommended for investors' consideration [13]

Core Insights - Nucor Corporation (NUE) and Steel Dynamics, Inc. (STLD) are leading steel producers in the U.S., crucial for the domestic steel industry and relevant for investors amid rebounding steel prices [1] - U.S. steel prices fell sharply in 2024 but have recently increased due to tariffs and improving demand, benefiting domestic steelmakers [2][3] Nucor Corporation (NUE) - Nucor is the largest steel producer in North America, investing $6.5 billion in eight major growth projects through 2027 to enhance production capacity [5] - The company has made strategic acquisitions, including Southwest Data Products and Rytec Corporation, to expand its product portfolio and create cross-selling opportunities [6] - Nucor has a strong balance sheet with $4 billion in liquidity and returned $2.7 billion to shareholders last year, maintaining a 52-year history of dividend increases [7] - The current dividend yield is 2% with a payout ratio of 36% and a five-year annualized dividend growth rate of 7.9% [8] - Nucor faces demand weakness in markets like heavy equipment, which accounted for 28% of its total shipments in 2024 [8][9] Steel Dynamics, Inc. (STLD) - Steel Dynamics focuses on customer needs and market diversification, with ongoing projects to enhance capacity and profitability [10] - The company is ramping up operations at a new electric arc furnace mill in Sinton, TX, expected to significantly contribute to revenues [11] - STLD generated $1.8 billion in cash flow from operations in 2024 and has $2.6 billion in liquidity, ensuring it can meet debt obligations [13] - The company raised its quarterly dividend by 9% to 50 cents per share, with a dividend yield of 1.6% and a payout ratio of 26% [14] - Automotive market slowdowns have impacted STLD, with significant declines in North American automotive production affecting steel consumption [15] Price Performance and Valuation - NUE stock has decreased by 35.6% over the past year, while STLD has lost 6.7%, against an industry decline of 36.8% [16] - NUE trades at a forward earnings multiple of 12.05, a 15.6% premium over the industry average of 10.42 [19] - STLD trades at a forward earnings multiple of 11.22, below NUE but above the industry average [22] - The consensus estimate for NUE's 2025 sales suggests a 2.4% increase, while EPS is expected to decline by 11.5% [21] - In contrast, STLD's 2025 sales and EPS estimates imply increases of 3.4% and 3.5%, respectively, with positive trends in EPS estimates [23] Investment Outlook - Both NUE and STLD are positioned to benefit from rising steel prices and trade policies, but STLD is favored due to better valuation and growth prospects [25]

Core Viewpoint - Steel Dynamics (STLD) shares have increased by approximately 7.9% since the last earnings report, which is underperforming compared to the S&P 500 [1] Group 1: Earnings Report and Market Reaction - The consensus estimate for Steel Dynamics has shifted by 5.01% over the past month, indicating that estimates have remained relatively stable [2] - The stock has received a poor Growth Score of F, while its Momentum Score is rated A, and it has a Value Score of B, placing it in the top 40% for this investment strategy [3] Group 2: Outlook and Ratings - Steel Dynamics holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return from the stock in the upcoming months [4]

Core Viewpoint - United States Steel is no longer the industry leader it once was, with Nucor and Steel Dynamics expected to be worth more in five years [1] Company Overview - United States Steel primarily produces steel using blast furnaces, an older technology that requires high utilization rates to be profitable [2] - The company has diversified its production processes but still faces challenges during industry downturns when demand and prices are low [4] Competitive Landscape - Nucor and Steel Dynamics utilize electric arc mini-mills, which are more flexible and have better profit margins throughout the steel cycle compared to blast furnaces [4][5] - US Steel is currently "in play" for a potential buyout by Nippon Steel, but the outcome is uncertain, and other suitors are also interested [6][7] Growth Strategies - Nucor is focused on investing in new facilities and expanding into higher-margin steel parts businesses, maintaining a steady growth trajectory [8] - Steel Dynamics has a more aggressive growth plan, also investing in new facilities and expanding into the aluminum sector, with a notable 10-year annualized dividend growth rate of over 10% [9][10] Investment Recommendation - The steel industry is currently facing economic uncertainty, but long-term investors are advised to consider Nucor and Steel Dynamics as they are likely to outperform US Steel in the coming years [11]

Core Viewpoint - U.S. Steel and Cleveland Cliffs face significant challenges due to their reliance on traditional blast furnace methods for steel production, making them vulnerable during industry downturns, while Nucor and Steel Dynamics, utilizing electric arc mini-mills, are positioned as stronger competitors in the cyclical steel market [1][4][5]. Group 1: Company Challenges - U.S. Steel and Cleveland Cliffs produce primary steel using blast furnaces, which are large and costly to operate, requiring high utilization rates to be profitable [2]. - The cyclical nature of the steel industry leads to significant profit fluctuations for U.S. Steel and Cleveland Cliffs, making them difficult for long-term investors to hold [4]. Group 2: Competitive Advantages - Nucor and Steel Dynamics employ electric arc mini-mills, which are smaller, more flexible, and utilize scrap steel, allowing for better margin management throughout the steel cycle [5]. - Steel Dynamics has achieved 14 consecutive annual dividend increases, while Nucor boasts over 50, establishing it as a Dividend King [6]. Group 3: Investment Opportunities - Steel Dynamics is identified as a growth stock with potential for expansion, including plans to develop an aluminum business, and has seen its dividend grow at a 17% annualized rate over the past decade [7][8]. - Nucor is characterized as a conservative investment option with a stable dividend growth rate of around 4% over the past decade and a current yield of approximately 1.9% [10]. - Nucor's stock has declined by 40% from its 2024 highs, presenting a potential buying opportunity for investors looking for industry leaders during downturns [11].

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Q1 2025 financial statements show net income declined to **$217.2 million**, with total assets at **$15.9 billion** and liabilities at **$7.1 billion** Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $6,216,705 | $5,431,338 | | **Total assets** | $15,930,428 | $14,935,233 | | **Total current liabilities** | $2,266,458 | $2,150,583 | | **Long-term debt** | $3,777,132 | $2,804,017 | | **Total liabilities** | $7,096,534 | $5,989,987 | | **Total equity** | $8,662,682 | $8,774,034 | - Total assets increased by approximately **$1.0 billion** from year-end 2024, primarily due to a **$597 million** increase in cash and equivalents and a **$205 million** increase in net property, plant, and equipment[9](index=9&type=chunk) - Total liabilities increased by approximately **$1.1 billion**, mainly driven by a **$973 million** increase in long-term debt[9](index=9&type=chunk) Consolidated Statements of Income Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total net sales | $4,369,195 | $4,694,003 | | Gross profit | $486,544 | $980,798 | | Operating income | $275,144 | $750,975 | | Net income attributable to Steel Dynamics, Inc. | $217,151 | $584,041 | | Diluted EPS | $1.44 | $3.67 | - Diluted earnings per share decreased significantly to **$1.44** in Q1 2025 from **$3.67** in Q1 2024, a **61% decline**[10](index=10&type=chunk) - Dividends declared per share increased to **$0.50** in Q1 2025 from **$0.46** in Q1 2024[10](index=10&type=chunk) Consolidated Statements of Cash Flows Q1 2025 vs. Q1 2024 Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $152,603 | $355,217 | | Net cash used in investing activities | ($178,759) | ($292,934) | | Net cash provided by (used in) financing activities | $623,295 | ($423,846) | - Cash from operating activities decreased by **57%** year-over-year, primarily due to lower net income and unfavorable changes in working capital, specifically accounts receivable[13](index=13&type=chunk) - Financing activities provided significant cash inflow due to the issuance of **$1.4 billion** in debt, which was partially offset by **$432.5 million** in debt repayments and **$250.1 million** in treasury stock purchases[13](index=13&type=chunk) Notes to Consolidated Financial Statements - The company operates through four reporting segments: steel operations, metals recycling operations, steel fabrication operations, and aluminum operations; segment reporting was recast in Q4 2024 to move an entity from metals recycling to the new aluminum segment[14](index=14&type=chunk)[43](index=43&type=chunk) - In March 2025, the company issued **$600.0 million** of **5.250%** notes due 2035 and **$400.0 million** of **5.750%** notes due 2055, generating net proceeds of **$972 million** for general corporate purposes[35](index=35&type=chunk) - The company repurchased **$250.1 million** of its common stock in Q1 2025 and declared dividends of **$74.7 million**[39](index=39&type=chunk) [Management's Discussion and Analysis (MD&A)](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **63%** decrease in Q1 2025 operating income primarily to metal spread compression - Consolidated operating income for Q1 2025 was **$275.1 million**, a **63% decrease** from **$751.0 million** in Q1 2024, primarily due to contracted metal spreads in steel and fabrication operations[59](index=59&type=chunk) - The company achieved **record quarterly steel shipments** of **3.5 million tons** in Q1 2025[58](index=58&type=chunk) Segment Operating Results Segment Operating Income (in thousands) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Steel Operations | $228,862 | $670,931 | (66)% | | Metals Recycling Operations | $25,710 | $12,752 | 102% | | Steel Fabrication Operations | $116,746 | $178,340 | (35)% | | Aluminum Operations | ($28,735) | ($7,555) | (280)% | - **Steel Operations:** Despite **record shipments** (up **8% YoY**), operating income fell **66%** due to a **17% decrease** in average selling prices, which outpaced the **7% decline** in scrap costs, resulting in a **22% metal spread compression**[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - **Metals Recycling:** Operating income **more than doubled** to **$25.7 million**, driven by expanded ferrous and nonferrous metal spreads and cost control initiatives[71](index=71&type=chunk) - **Steel Fabrication:** Operating income decreased **35%** as a result of a **6% decline** in volume and an **18% contraction** in metal spread; however, the order backlog remains **strong**, extending through **Q4 2025**[77](index=77&type=chunk)[78](index=78&type=chunk) - **Aluminum Operations:** The segment reported a **larger operating loss** due to increasing construction and start-up costs for its new flat rolled mill; commercial shipments are expected to begin in **mid-2025**[80](index=80&type=chunk) Liquidity and Capital Resources Liquidity Position as of March 31, 2025 (in thousands) | Component | Amount | | :--- | :--- | | Cash and equivalents | $1,186,917 | | Short-term and other investments | $262,943 | | Revolver availability | $1,190,678 | | **Total liquidity** | **$2,640,538** | - Total debt increased by **$965.1 million** during the quarter to **$4.2 billion** due to the issuance of new senior unsecured notes in March 2025[88](index=88&type=chunk) - The company invested **$305.5 million** in capital expenditures in Q1 2025, primarily for the aluminum and steel operations segments[92](index=92&type=chunk) - The quarterly cash dividend was increased by **9%** to **$0.50 per share** in Q1 2025[93](index=93&type=chunk) - The company repurchased **$250.1 million** of its common stock in Q1 2025; as of March 31, 2025, **$1.4 billion** remained available under the February 2025 share repurchase program[96](index=96&type=chunk) [Market Risk Disclosures](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages market risk from raw material and product price fluctuations using competitive pricing and financial hedges - The company is exposed to price fluctuations for raw materials such as metallic scrap, electricity, natural gas, and zinc[99](index=99&type=chunk) - To manage risk, the company enters into forward exchange-traded futures for nonferrous and ferrous metals to protect profit margins on fixed-price contracts[29](index=29&type=chunk)[101](index=101&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were **effective** as of March 31, 2025, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[102](index=102&type=chunk) - **No material changes** occurred in the company's internal control over financial reporting during the first quarter of 2025[103](index=103&type=chunk) [PART II. Other Information](index=32&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Routine legal and regulatory matters are ongoing, with no expected material impact on the company's financial condition - The company states that **no ongoing litigation** is expected to have a **material impact** on its financial condition or results[104](index=104&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) **No material changes** to the company's previously disclosed risk factors were reported for the quarter - **No material changes** to risk factors were reported for the quarter[106](index=106&type=chunk) [Issuer Purchases of Equity Securities](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased **$250.1 million** of common stock and authorized a new **$1.5 billion** share repurchase program Q1 2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 - 31 | 634,100 | $122.65 | | Feb 1 - 28 | 433,484 | $132.75 | | Mar 1 - 31 | 907,278 | $126.56 | | **Total** | **1,974,862** | **N/A** | - In February 2025, the board of directors authorized an additional share repurchase program of up to **$1.5 billion**[108](index=108&type=chunk)