Nucor (NUE) Risk Analysis

Global steel production overcapacity continues to be an ongoing risk to Nucor and the entire steel industry. The Organisation for Economic Co-operation and Development (the "OECD") has estimated global steel production overcapacity to be approximately 704 million net tons in 2025. This level of excess capacity is eight times the current annual steel production in the United States. China continues to be a significant contributor to excess steelmaking capacity, producing more than one billion net tons of steel in each of the past eight years, despite experiencing slower economic growth. Chinese steel producers are also investing in new steelmaking capacity in several countries in southeast Asia and Africa. As a result, the OECD projects that excess global steel capacity could increase nearly 20% to an estimated 795 million net tons by 2027. During periods of global economic weakness, the effects of this overcapacity are amplified because of weaker global demand for steel and steel products. Steel manufacturers in non-market economies, such as China, tend not to adjust their production levels in line with regional demand and instead export significant amounts of steel and steel products at prices that can be at or below their costs of production. In countries with non-market economies, the steel industry is often subsidized or owned in whole or in part by the government, which can provide these producers with cost advantages or cause their production decisions to be driven by political or social factors rather than price and demand signals. Surplus output from steel producers in these countries can flow into the U.S. market. These exports to the U.S. can result in downward pressure on realized steel prices for Nucor, adversely affecting our business, results of operations, financial condition and cash flows. After recent years of weakened effectiveness due to country exemptions and product exclusions, steel tariffs first imposed in 2018 under Section 232 of the Trade Expansion Act were fully reinstated in 2025 without exceptions or exclusions, and were broadened to cover approximately 600 fabricated steel products. These comprehensive tariffs have been more effective in combating circumvention behaviors and keeping unfairly traded imports out of the U.S. market. There can be no assurance as to when or if the Section 232 or other import tariffs, quotas or other duties may be enacted, enforced, extended, modified or terminated in the future. If the Section 232 or other import tariffs, quotas or duties expire or if others are further relaxed or repealed, or if relatively higher U.S. steel prices or a stronger U.S. dollar make it attractive for foreign steelmakers to export their steel products to the United States, despite the presence of import tariffs, quotas or duties, the resurgence of substantial imports of foreign steel could create downward pressure on U.S. steel prices.

The steelmaking business is subject to numerous inherent risks, particularly unplanned events such as explosions, fires, other accidents, natural disasters such as floods, hurricanes or earthquakes, critical equipment failures, acts of terrorism, inclement weather and transportation interruptions. Nucor maintains property insurance for these types of losses but self-insures a significant portion of the program. Therefore, while our insurance coverage could offset a portion of the losses relating to some of those types of events, our results of operations and cash flows could be adversely impacted to the extent that any such losses are not covered by our insurance, or that there are significant delays in resolving our claims with our insurance providers.