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Morningstar: Nucor Steelmaker Shines
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US based Morningstar research has been looking at Steelmaker Nucor. Morningstar has assigned the company a positive moat trend, believing it is likely to improve its positioning.
Researchers point out that because steel is an alloy of iron and carbon the industry comes down to a competition between who can procure iron units at the lowest cost.
In late 2013 Nucor began production of Direct Reduced Iron (DRI) at its new production facility in Louisiana. At this facility Nucor reduces iron ore by use of low cost natural gas to produce DRI.
Nucor's DRI facility is the largest such facility in the world and the only one in the US. Morningstar points out that early results regarding product quality and yield have exceeded even the company's own expectations.
Its view is that Nucor's DRI project will reduce the company's iron related unit costs in years to come which points to a positive moat trend for the company.
Morningstar has assigned a 58 dollar fair value estimate to Nucor's shares.