Prepared remarks
Good morning, and welcome to Nucor's Second Quarter 2026 Earnings Call. The call is being recorded. I would now like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call.
Thank you, and good morning, everyone. Welcome to Nucor's Second Quarter Earnings Review and Business Update. Leading our call today is Leon Topalian, Chair and CEO, along with Steve Laxton, President and COO; and Jack Sullivan, CFO. Other members of Nucor's executive team are also here with us today and may participate during the Q&A portion of the call. Yesterday, we posted our second quarter earnings release and investor presentation to Nucor's IR website. We encourage you to access these materials as we'll cover portions of them during the call. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of securities laws. Actual results may be different than forward-looking statements and involve risks outlined in our safe harbor statement and disclosed in Nucor's SEC filings. The appendix of today's presentation includes supplemental information disclosures along with the reconciliation of non-GAAP financial measures. So with that, let's turn the call over to Leon.
Thanks, Chris. And before discussing the quarterly results, I want to begin with the most important measure of our performance and our greatest value: safety. Earlier this year, we launched our safest summer ever initiative because we know that the summer months can present additional risks. As we move into August, I'm pleased to say that we're on pace to not only make this the safest summer in Nucor's history, but also the safest year as well. While I'm proud of our progress, our job isn't finished. Let's remain focused and make sure every one of our teammates goes home safely at the end of every shift. Turning to our financial results. Nucor delivered another strong quarter with improved earnings across all three operating segments. We generated approximately $2 billion of EBITDA and earned $5.04 per share; excluding a noncash benefit of $0.20, adjusted earnings were $4.84 per share. During the quarter, we returned $479 million to Nucor's shareholders through dividends and share buybacks, representing 41% of our net earnings. Capital expenditures totaled $571 million in the quarter, and we still expect to reinvest approximately $2.5 billion for the year, with about 60% of that allocated towards growth projects. Moving to our operational performance. Demand for steel and steel products remains strong across most of our key end markets, and our teams continue to execute exceptionally well. In the steel mills, quarterly shipments reached an all-time high of 7.1 million tons. This is the second straight quarter we've set a new record. We're seeing strength across all of our product categories and are benefiting from the investments we've made to grow our core steelmaking capabilities over the past few years. In particular, I want to recognize our team at Brandenburg, which shipped more than 230,000 tons this quarter, leading to another quarterly shipment record in plate. In Steel Products, shipments were up 11% versus Q1 with growth across all major products in the portfolio. This performance was led by our Tube group which posted a second consecutive quarterly shipment record and strong earnings. And even as our shipments grow, our backlogs continue to build; this reflects the business momentum we are seeing from our customers across a broad set of sectors in the economy. Our team is executing at a very high level right now. Execution is critical, but so is having a level playing field. While we saw an increase from the first quarter, finished steel imports are down 25% year-over-year due to the strengthening of the Section 232 program, along with antidumping and countervailing duties on corrosion-resistant steel and other steel products. The impacts are real, and they are measurable. Vigorous enforcement of our trade laws is helping level the playing field for domestic producers by curtailing the flood of unfairly traded steel into the U.S. market. Earlier this month, as expected, the administration announced it has opted not to renew the USMCA trade agreement unless changes are made. This decision triggers an annual review process that provides a real opportunity to improve demand for North American content while closing loopholes that operate to the detriment of the American industry. One important change we hope to see is a requirement that all steel used in any steel or steel-intensive products must be melted and poured in North America to qualify as USMCA compliant. We also believe the North American steel purchasing requirement for automotive products should be increased with a melted and poured requirement effective immediately. Finally, a renewed agreement should require Canada and Mexico to take additional steps to prevent excess capacity from non-USMCA economies, particularly China, from entering North American supply chains and undermining our industries and workers. Beyond USMCA, the U.S. Trade Representative is currently conducting investigations under Section 301. We support the administration's use of tools like these to level the playing field for American manufacturers and achieve balanced trade. We also commend the administration's decision to act consistently with the Section 232 program and exempt vital steelmaking inputs and raw materials from the final action in the Brazil and forced labor 301 investigations. We urge the administration to do the same in all other 301 investigations. These are more than simply trade policy priorities; they're investments in America's long-term industrial strength. With our nation recently celebrating its 250th anniversary, it's worth remembering that America's success has been built not only on freedom, but also on the ingenuity, resilience and productive capacity of American manufacturing. A robust industrial base has always been essential to our economic prosperity and our national security. For generations, steel has been the backbone of America's growth, security and prosperity and it will remain essential for generations to come. At Nucor, we are proud to help build the bridges, buildings, energy infrastructure, manufacturing facilities and defense capabilities that keep our country strong. With that, I'll turn it over to Steve for an update on our growth initiatives and market outlook. Steve?
Thank you, Leon, and thank you all for joining us this morning. Our team is continuing to make great progress at our new sheet mill project in West Virginia. We remain on time and on budget with continued excellent safety performance. The team has achieved several important milestones over the past two months. In June, we ran our first coil through the pickle line. And earlier this month, we began commissioning of the melt shop and both the automotive and construction galvanizing lines. Later this year, we will expand that to the cold mill and hot mill, keeping us on track to complete commissioning inspections and testing of equipment across the mill by the end of the year. Our startup plan is unchanged. Following commissioning, our priority will be to operate safely and reliably as commercial shipments begin to ramp in early 2027, and capacity utilization and product offerings will be building steadily throughout 2027 and into 2028. In addition to West Virginia, we're making steady progress across our other major capital projects that are either under construction or ramping up. On the construction front, we expect to complete our Berkeley galvanizing line, the full range of our Crawfordsville coating operation and the Indiana Towers and Structures facility later this year. We also expect our Utah Towers and Structures facility to reach full production by mid-2027. Turning to our recently completed growth projects. We continue to advance their strategic and commercial plans. Many of these projects, including our Lexington micromill and our Kingman melt shop reached EBITDA positive run rates during the first quarter, while others like our Alabama Towers and Structures facility are expected to reach EBITDA positive later this year. Across these projects, performance has improved steadily throughout the year, and we expect that trend to continue as they ramp to their full run rates. Leon spoke earlier about the operational results in our steel mill and our Steel Products segment. Building on that, I'd like to share how we're thinking about the current market environment and outlook for each of our businesses. Overall, the strength we see across the broad set of end markets is very encouraging. We now expect shipment growth to finish closer to the higher end of our previously suggested 5% to 10% range for 2026. Beginning with flat products, we've seen double-digit shipment growth in both our sheet and plate groups in the first half of the year. Within sheet, underlying demand is strong, and we expect that to continue into 2027, led by energy, advanced manufacturing and data centers. In plate, although domestic consumption has moderated from the 2025 levels, demand remains healthy across many important end markets, while imports have fallen significantly. That backdrop, combined with our expanded plate capabilities, positions us well heading into the second half of the year. Moving to Long Products, our Bar and Structural mills have also seen a meaningful step-up in shipments year-to-date. In our bar group, rising rebar demand reflects a sustained multiyear construction cycle with energy, infrastructure, advanced manufacturing and data centers more than offsetting softness in residential construction. In structural, domestic consumption has increased approximately 15% this year, fueled by data centers and other mega projects. While higher imports have absorbed some of that incremental demand, our backlogs are up significantly compared to prior years. And we expect that strength to carry into next year. Nucor is unparalleled in its geographic reach, product diversity and size. These factors are allowing our team to optimize at scale to more effectively and more efficiently meet customer needs. Finally, our Steel Products segment represents one of the broadest and most diverse portfolios of steel construction products in North America. Throughout these businesses, we're seeing many of the same demand drivers as in our steel mill segment with order visibility extending into 2027 for many products. Looking to the second half of the year, we expect continued momentum across our Steel Products group, along with further margin expansion over time as higher realized pricing more than offsets higher steel input cost. With that, I'll turn it over to Jack for a closer look at our second quarter financial results and our outlook for the third quarter. Jack?
Thanks, Steve, and good morning, everyone. In the second quarter, Nucor generated net earnings of $1.2 billion or $5.04 per share, exceeding the midpoint of our guidance range by $0.29. Excluding a noncash benefit of $0.20 related to an increase in the value of our Helion investment, adjusted earnings were $4.84 per share. The beat relative to our mid-quarter guidance was largely due to better-than-anticipated results in our steel mills segment, with many divisions outpacing their June forecast. Steel products and raw materials segments also came in ahead of forecast. Let me now review our second quarter performance by segment. The steel mills segment generated $1.6 billion of pretax earnings, an increase of more than 35% from the prior quarter. Higher average selling prices, especially in our sheet and plate groups, were the largest drivers of the quarterly increase. And even with a few fewer calendar days compared to the prior quarter, Q2 shipments for the steel mills segment grew slightly. The results also reflect $130 million of cash refunds associated with prior period raw material procurement costs primarily related to pig iron. Turning to Steel Products. We generated pretax earnings of $353 million, up more than $75 million from the first quarter. Volumes increased 11% on stable pricing with the volume growth occurring across all of our major product lines. And in our raw materials segment, we generated pretax earnings of $146 million compared to $45 million in the prior quarter reflecting higher volumes and improved margins. Our DRI operations benefited from a higher transfer price as we base internal DRI sales on pig iron pricing, which has risen over the past several months on strong demand in the U.S. We also saw improved performance in our scrap processing operations. Preoperating and start-up costs totaled $120 million for the quarter. We expect these costs to remain elevated through the rest of 2026 and throughout 2027 as we complete construction and ramp up production at our greenfield sheet mill in West Virginia. Turning to the balance sheet and capital allocation. Our strong investment-grade credit profile has long been central to Nucor's success, enabling us to consistently invest in growth while delivering meaningful returns to shareholders. We ended the quarter with approximately $2.7 billion in cash and liquidity of $3.4 billion. Total debt as a percentage of capital sits at 23%, and our credit ratings remain the strongest of any North American steel producer. During the quarter, we generated $829 million in free cash flow, our strongest quarter since 2023 as higher earnings drove improved cash from operations and CapEx moderated to $571 million. We also returned $479 million to shareholders through dividends and share repurchases, an increase of more than $200 million from the first quarter and representing 41% of quarterly net earnings. Consistent with our capital allocation framework, we remain committed to returning at least 40% of net earnings to shareholders on an annual basis. Year-to-date, we've returned over $730 million to shareholders and deployed approximately $1.2 billion in CapEx, with most of that going towards growth projects. Taken together, more than 75% of the capital we've allocated this year has gone directly to shareholder returns and growth investments. Looking forward, we expect free cash flow to continue to inflect higher as these growth projects come online and CapEx moderates. Turning to our third quarter outlook. We expect higher consolidated earnings. For the steel mills segment, in contrast to the second quarter we do not expect any further cash refunds to materially benefit us in the third quarter or beyond. Even without that benefit, we expect higher third quarter segment earnings from expanding metal margins and stable volumes. The margin improvement reflects higher realized pricing across all product groups. In Steel Products, we expect increased earnings from higher volumes and higher average realized pricing. In raw materials, we expect lower earnings, primarily due to lower margins resulting from lower expected realized scrap pricing and elevated iron ore costs due to the idling of some pellet capacity in the Middle East. As we look to the second half of 2026, we're encouraged by strong demand across key end markets, growing contributions from our recent investments and federal policies that support a healthy domestic steel sector. With the broadest range of capabilities in the North American steel market, the Nucor team is well positioned to create value for our customers and shareholders. And with that, we'd like to hear from you and answer any questions you may have. Operator, please open the line for questions.
Questions and answers
Very nice to hear from you all, and thank you for today's update. If I could, I'd like to start off with your view on flat rolled benchmark pricing and the CSP. It was up another $10 yesterday as per your report, continuing to extend the gap versus import parity pricing. Given that the U.S. still is a net importer of steel, to what do you attribute the continued willingness of customers to buy domestic despite the import price advantage?
Lawson, it's Leon. I'll kick this off and then maybe ask Noah Hanners, who's over our sheet group, to touch on it because I think there's a lot to unpack in your question. Look, I also want to begin with thanking our team for the safest start to any summer in the history of Nucor. It's the men and women of this entire company that drive every result we're going to talk about today and how they execute. Becoming the world's safest steel company is our most important value. With all that said, the demand drivers across the spectrum are incredible. As we look specifically to sheet and your question about the relative balance on imports, we saw a tick up quarter-over-quarter in imports primarily in beams and some in sheet. But the reality is it's not a pricing delta that's driving that; it is a demand picture that we're seeing. The robust demand almost in every product group area that we have is either at or near record backlog and record order entry rates and is driving healthy returns for our shareholders. So again, this isn't where we saw in 2021 or 2022, where you had a really rapid spike of HRC and knew it wasn't sustainable for very long. It is a very different condition today. Part of that comes in what Noah and his team have done regarding CSP. Noah, why don't you unpack that and dive a little deeper.
Yes, Lawson, to build on what Leon shared about demand and why we see it so strong now and continuing into 2027, let's back out and talk about the broader demand picture for sheet. Imports, while a little elevated in Q2, remained very low. If you back up to 2024, we saw sheet imports at 9 million tons. Today, we look forward and see probably 4.5 million tons this year. So that's 4.5 million tons of additional addressable market for domestic suppliers. You add on to that what we believe is a couple of million tons of increase in ADC. So roughly 6.5 million tons of addressable market for domestic suppliers — a strong market for us to participate in. Talking about the significance of some of those demand drivers, Leon mentioned a few in the opening: defense, energy, data centers. These things are all consuming millions of tons, and they are not one-off projects in 2026. We expect multiyear demand out of some of these drivers. The other thing I'll share with you is we're starting to see some reshoring driving new demand for us. The reshoring looks different than you may expect. It's things like auto and consumer durables where consumption here in the U.S. isn't necessarily going up, but we've seen our customers restoring production here to utilize existing capacity. So we're supplying more into auto, for example. Our auto shipments are up 6% Q2 over Q1. The last thing I'd share on the demand side is we're finally seeing service center demand during the quarter. Service center shipments were up 10% in June year-over-year, and we expect that trend to continue with really moderate to low inventories throughout the supply chain. All that together, we think, looks like a very strong demand picture for us in 2026 going into 2027. I want to take a minute and talk about CSP because that's the other thing that feels so unique about this market. It's not just demand but how pricing has moved over the last six months to a year. We believe our discipline and our approach around CSP has materially changed volatility in this market. These extreme swings in sheet pricing have existed for decades and we're providing our customers with transparent hot-rolled pricing every week. What we're seeing from them is we do not see the speculation we typically would have seen at this point in the cycle before. We're seeing buying that is reflective of supply and demand, not speculation. We also think this has contributed to imports remaining low because customers are able to buy what they want when they need it. So we see a really strong demand picture, we are confident in our approach with CSP, and we have the best steelmaking team in the world operating at a really high level right now. We feel good about 2026 going into 2027.
I really appreciate that detail, guys. That's really helpful. If I could, just a follow up. Thank you very much for providing the shipment tonnages for Brandenburg. It suggests the capacity utilization around 75% and I mean would you push back on us putting 75% capacity utilization in our models for that asset going forward?
Yes, Lawson, this is Brad. I'll tackle that one. As you mentioned, the team had an awesome quarter. Brandenburg produced record volumes and record earnings. I'd expect that number to continue to creep up. The investments we've made over the last 18 months in product development are really paying dividends. Nearly one-third of the shipments out of Brandenburg in Q2 were grades and sizes that were previously unavailable from our core plate group prior to Brandenburg. Things like API line pipe, where we're fully qualified and producing net shipping now — we expect that to be as much as 25 million tons in 2027. Armor grades for our nation's military; we continue to qualify and expect to be a larger participant in the future. ABS grades for shipbuilding, wide and long plate for bridge applications and on down the list. In addition, it opens up doors for companion tons for our plate group. Obviously, that was reflected in our record shipments, backlog and market share in Q2. So I'd expect additional upside, not just out of Brandenburg, but out of the plate group into the future.
I wanted to try to drill down a little bit more on some of the projects' progress if we could. Definitely seems like you're collecting on the ramp-up of some of these projects that you've been talking about for a while. Can you help us put a finer point on how to quantify the benefit of some of these towers and structures and galvanizing lines ramping up? Could that help Q3? Could Q4 with all this demand see an offset to typical seasonality?
Well look, Tim, I'll kick it off and maybe let Jack or Steve jump in or any of the product group folks. If we go back to Lexington, for example, the Lexington micromill is already EBITDA positive and contributing. Our Kingman, Arizona facility is doing the same thing. Brandenburg, as you heard Brad mention, is also profitable and ramping up very quickly. The towers and structures facilities — yes, you're going to see additions come in during the back half of the year positively to the balance sheet and our cash flow. As we think about Berkeley's galvanizing line, which is going to come on later in Q3, it's probably end of the year or early Q1 before we see that cash positive because demand drivers are so strong that before we see that cash positive, but that's going to come very, very quickly. It's a line we know well; it's their second galvanizing line, a product we know and a customer base we know. So this isn't going to be a slow ramp up. We should be able to ramp up that facility very quickly. Same in Crawfordsville. The things that will carry into 2027 before we see some likely positive contribution will be the third Towers and Structures greenfield facility in Utah that will come on in Q1 of next year. It will take a little bit of time to ramp up, and I would expect by the end of the year that it is contributing very nicely. If we think about the Towers and Structures group as a whole, it's an area we looked at for M&A and, when that didn't work out, we built via smaller acquisitions and greenfield facilities. We've mentioned previously that we were going to generate $150 million of EBITDA through that group. What I would tell you is the order book, the backlog, and the relationships with the utilities that are being built by that team make me believe that $150 million is a conservative number. There's upside potential to that number. We're ramping that up very quickly and you'll see in the coming weeks some things that will come to fruition in the backlog. All of this culminates with the West Virginia facility that will start up later this year. I would tell you 2027 will be the ramp-up year. I'm not sure it will be fully cash positive in 2027, but certainly as it finds its footing it will contribute. For the next two, three, four decades, that mill will continue to ramp up Nucor's overall earnings profile well beyond the $6.7 billion that we rolled out in 2022 from a through-cycle standpoint. Finally, the demand drivers we're seeing create a profile unlike I've ever seen in my career. Again, in almost every area across the spectrum, not only is the market demand strong, but Nucor's capability set is the broadest and most diverse it's ever been. There are a bunch of things we don't talk about a lot on these calls — border walls, grating, gas distribution, fasteners, our tube group, tower structures, insulated metal panels, Nucor data systems — they are all contributing at a really high level and executing very well. I couldn't be more optimistic about the back half of this year. As we head into 2027, I think 2027 could be a very special year, not just for Nucor, but for this industry.
Okay. If I could — congrats on your 30 years as well. But if I could follow up on the 2027 outlook and you've been intimating the CapEx is rolling off, of course. And a lot of interest in what Nucor's next plans are for cash use. Could you just give us any more color on how you're seeing the landscape with build versus buy in the downstream side and if that's still your focus for growth?
Yes, absolutely. Almost seven years ago when I became CEO, our mission statement was really simple: grow the core, expand beyond and live our culture. Culture is how we care for the 33,000 men and women of this family. The core is steelmaking — the mills, galvanizing lines, prepaint, Lexington micromills, Brandenburg, West Virginia. The 'expand beyond' is the area where we purchased CHI Overhead Doors and Ridetech and have been excited about the differentiated value those businesses bring to our customers. That leads to your question: where is the cash going to go because we're going to continue to generate a lot of money? It's going to go into the 'expand beyond' bucket. You can think about a few things. One: it will come in and around the megatrend areas — towers and structures, downstream enclosures, energy infrastructure. Those are the types of areas our M&A and BD teams are looking at. I obviously can't get into specifics, but I wanted to provide color so you can understand where that's going to go. Two important caveats: First, Nucor's vision then and now wasn't a pivot because our model broke. We're the safest, cleanest, most profitable steel company in the world; I would rival us against anyone. So we don't have to pivot away from a broken model. We get to tweak and reinvest in our operating divisions to make them more efficient. We will use AI and automation to create safer outcomes and higher returns. Second, we'll be incredibly disciplined with our capital. There's no urgency to deploy capital poorly. If an opportunity isn't accretive or if we can't find pathways to being the market leader and exceed our cost of capital, we're simply not going to do it. If we don't find those opportunities, you're going to see a lot of money coming back in the form of dividends and share repurchases to our shareholders. As Jack spoke to earlier, we're committed to returning 40% of our net earnings. But you can expect there will be some incredible growth opportunities for Nucor in the 'expand beyond' bucket in the coming years.
Thanks for all the color and nice job on the quarterly execution. Based on your comments on expectations to be at the higher end of the range, 5% to 10% for the mills, and taking into account backlog, longer lead times, low inventory in the channel and so forth, how should we think about seasonality in the back half of the year including in the fourth quarter, which I believe you might have fewer shipping days? Can you help us understand the profile in the back half? That would be helpful.
Bill, this is Steve. I'll take this one. We'll be closer to the high end of the previously guided range of 5% to 10%. We all know there's seasonality in our business, so you should expect a little bit of that in the fourth quarter. But as Leon, Brad and Noah have already addressed, the demand drivers are extremely robust right now, they're multiproduct and across the spectrum of what we produce. So we're pretty bullish on the back half of the year. That doesn't mean there won't be seasonality — there always is — but it's a relatively smaller move down because there's still so much strength in the marketplace.
And Bill, to your question about the fiscal days in the fourth quarter, we'll have 91 days in the third and 89 days in the fourth.
Okay. Great. That's helpful. And then maybe drilling down to the border wall opportunity, can you give us a sense of the shipment opportunity into 2028 and any color you can provide on your share expectations?
Bill, this is John Hollatz. I appreciate you bringing up that border wall. That is a mega trend that needs attention. I appreciate Noah bringing it up earlier. Nucor is the only company with the raw materials, the sheet and tube capacity and the logistics team to keep up with the demand for this border wall. We're shipping thousands of tons every week to multiple locations along the border and that is expected to continue well into 2028. If you look at the volumes that are going through our tube group, it will show you the increase that you've seen year-over-year, and that's on top of an already strong demand for our traditional HSS products and leading to a lot of the improved earnings we expect in the second half of 2026.
The first is on the raw materials division that had a very strong quarter. It looks like it should have been a relatively steady, slightly up quarter, so I was wondering if you could provide some visibility on what drove the performance? The strength over the past year has been pretty noticeable. Should the margin trends we've seen for that division carry forward? That would be my first question.
Yes, Tristan. This is Al Behr. I'll take that one. I'm really proud of our raw materials team and how the whole team performed during the quarter; the results speak for themselves. That segment includes a handful of businesses but I'll share thoughts on a couple of the bigger pieces: our recycling yards and our DRI operations. For the recycling yards, it's a simple story of strong volumes with higher margins. We saw strong margins in the quarter both on shredded metals as well as on recovered nonferrous metals that we sell as byproducts, coupled with consistent strong commercial and operational performance within those businesses. On the DRI side, also a great quarter. We set a quarterly production record as rising pig iron allowed us to lean into DRI as an alternative supply for our mills and our DRI teams really rose to the occasion. I'm proud of what they did. What's important about that is it's another example of how our strategy of building flexibility into our raw material supply chain drives value for the organization. We believe there's always a winning play in the market and we've got the depth and breadth to find those plays and run them.
That's very clear. My second question is a quick one. Could you provide an update on the CapEx guidance? You had some big use of working capital in H1 — how should we think about H2?
Thanks, Tristan. I'll take CapEx first. Earlier this year, we guided to $2.5 billion for 2026, materially down from the prior year. Halfway into the year, we're at about 50% of that. We remain on target with that $2.5 billion estimate we gave earlier this year. With respect to working capital, yes, we did see a bit more of a build in Q2 primarily related to the higher backlog, which leads to some higher inventory at higher valuations. Both inventories and receivables did tick up. I have to give a lot of credit to the team for how we're managing inventory and cash conversion. Operationally, we're working through a really strong demand environment with shareholder interests in mind. Looking into the second half of the year, we expect some moderation in working capital as we get into the fall months, and it could be a slight source of cash in the back half of the year.
I have one follow-up. I wanted to drill in a little on the shipment mix. You mentioned sheet is going to see continued strength through 2027 but volumes were a little softer in Q2 quarter-over-quarter. Was the softness due to some softness in the order book or an outage? Are you starting to see import products coming back in on the flat side? And on the contrary, your bar shipments have continued to accelerate despite long-product imports ticking back up in Q2. What would you attribute that market share capture to, and how should we think about that going forward?
Nick, this is Noah. I'll start with sheet. You talked about Q2 versus Q1 shipments. We actually broke another production record in Q2. What you saw in Q1 was that we entered the quarter with some inventory we were able to ship, but we converted more efficiently in Q2, and we expect that level of production and shipment to continue.
Yes, Nick, this is Randy Spicer. The team performed tremendously in the second quarter, which was reflected in our performance. We're being driven by a lot of the things talked about today: growth in infrastructure investment, manufacturing reshoring and continued growth in data centers. To echo earlier comments, we've also been a very active participant in border fence work. All of those factors, along with our newer assets coming online, have allowed us to take advantage of growth in the second quarter and into the rest of the year.
Maybe starting on the demand outlook more broadly. You talked about a couple of tailwinds that could last for the next few years. In your view, what would be a reasonable assumption for underlying demand growth over the next two to three years?
Katja, this is Steve. I'll take this one. The backdrop for demand is broad and strong across many channels and is driven by fundamental reshoring and capital investment cycles that tend to be multiyear in nature — things like energy investments that are not likely to slow down over the next few years. For this year, we would estimate around 2% growth in demand across all products. Nucor's portfolio is positioned a bit more strongly to some of the stronger areas of the market, so that's a general industry comment rather than company-specific. We see strength at least for the next couple of years in that band, if not more. Parts of the market that are weak now are consumer-oriented activities that are more interest-rate sensitive. If consumer behavior improves, you could see upside. But the backdrop right now should continue for multiple years.
Okay. And on the West Virginia mill, can you remind us how to think about utilization rates over the next two years? Will the demand outlook change how the ramp-up progresses?
Katja, we've shared previously that we expect to be at about 50% utilization by the end of year one. Our focus from now through 2027 is safety, reliability and consistent production. You can draw a straight line from January to December and expect we'll be at about 50% by year-end. As we move into 2028, we'll focus on growing volume and moving into qualifications that get us into higher-quality items like consumer durables and auto that West Virginia is capable of producing. We'll make good financial decisions with the tons we put in that mill. One of our strengths is we can shift tons around from other mills to support West Virginia as it ramps in 2027 and leverage our downstream pull-through — we ship about 2 to 2.5 million tons internally — which supports a strong ramp.
Katja, the other comment I'd make is that we've started mills in many different market environments, including challenging ones. West Virginia couldn't be starting up at a better time. They've run their first coil through the pickle line and will ramp up through the rest of this year. From a demand perspective, having the pull-through while starting up a mill is ideal. We've balanced start-ups like this before and we know our customers and how to balance tons across assets. As we go into 2027, the demand drivers should support West Virginia's ramp to 50%, 60% and higher utilization.
I wonder if you could provide a little more color on raw material pricing. You mentioned you price your DRI based on pig iron; could you elaborate on any lag on that reference pricing and what specific iron price you're looking at? Do you see the imported pig iron pricing in the U.S. or perhaps the exported price from Brazil as a reference? Anything would help given the material increase in profitability in that segment.
Carlos, we don't typically talk about the direct correlation between our transfer price and pig iron in quantitative terms, but as you said, it is influenced by the price of pig iron. When pig iron prices go up, our DRI transfer price goes up, and that was a benefit in the quarter. There is a lag — the sales cycle between buying ore pellets, converting them to DRI and getting them to our mills can vary based on inventory positions throughout the supply chain. I don't want to quantify that lag because it varies, but yes, there is a lag. The transfer price is influenced by pig iron prices and will flow correlated to those prices.
Fair enough. Another question related to imports of beams and rebars: they are picking up recently. You flagged that in your presentation. What do you think may be behind this, particularly as beams are picking up quite significantly? What actions could the company or the industry pursue to limit these imports?
Carlos, I'll kick that off. While we don't want imports to rise, the recent spike you referenced is largely a function of demand. We saw an increase of more than 50% in beams quarter-over-quarter, but it's tied to demand. Our beam facilities — Nucor Yamato Steel and Berkeley Beam — are sitting on backlogs unlike we've seen before. The demand drivers are very strong and create a need for additional volume that imports are helping supply. That said, if you had asked me five years ago whether I would accept 16% overall imports into the U.S., I would've said yes compared to earlier periods where we've seen 22% to 27% of the domestic market flooded by illegally dumped and subsidized imports. Even with spikes, the current picture is robust demand and a market that remains favorable for domestic production.
If I may squeeze one more quickly: last quarter you mentioned steel demand in the U.S. growing around 2% to 2.5% this year. Has that changed, and if so what's the new number?
Carlos, we would reaffirm that we're around 2% growth for the industry this year.
Well, thank you for joining us today. Before I wrap up, I want to once again recognize our team for delivering an outstanding second quarter and for the commitment they demonstrate every day as we work towards our goal of becoming the world's safest steel company. Your dedication to serving our customers, operating safely and executing our strategy continues to set Nucor apart. I also want to thank our customers and our shareholders for the trust you place in us. We remain incredibly optimistic about the opportunities ahead for Nucor and believe we are positioned to continue to have our best days in front of us. Thank you all, and have a great day.
Thank you for attending. You may now disconnect.