Steel Dynamics sees quaterly profit below Street goal

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(Global Markets) - Steel Dynamics Inc (STLD.O) gave a first-quarter profit forecast below Wall Street estimates, saying it was hit by an unexpected pricing squeeze and lower customer orders.

The announcement came a day after rival U.S. steelmaker Nucor Inc (NUE.N) cited similar reasons for setting a lower-than-expected first-quarter earnings target and AK Steel (AKS.N) said it expected a first-quarter loss because of weak demand.

Shares of all three companies rose by up to 3 percent, as analysts said investors were looking beyond the short-term hit and instead focused on the rosier longer-term demand.

In afternoon trading on the Nasdaq, Steel Dynamics' stock was up 3.2 percent at $15.19. On the New York Stock Exchange, Nucor was up 2.2 percent at $44.41, and AK Steel was up 3.2 percent at $8.15.

"The stocks were likely up on broader news on consumer confidence and not reacting to warning factors already known," said analyst Bridget Freas, of Morningstar.

"Even AK Steel said demand would be better in the second quarter, so there is positive momentum," she said.

Steel Dynamics said it expects to post earnings in the range of 15 to 20 cents per share for the first quarter. Analysts on average have expected Steel Dynamics to report earnings of 36 cents per share, according to Thomson Global Markets I/B/E/S.

"While sequential quarterly financial improvements are expected in both the company's steel and metals recycling operations, these improvements are somewhat tempered by unexpected margin compression that began to occur mid-quarter," the Fort Wayne, Indiana-based company said in a statement.

It said flat-roll steel markets moderated more quickly than the price of raw materials such as scrap metal, "against a backdrop of increased import interest, introduction of additional domestic capacity and reduced order activity.

"Reduced steel customer buying activity seemed linked to an anticipation of lower scrap pricing, despite the continued strength in demand associated with energy, construction equipment, agricultural and automotive sectors," it said.

Steel Dynamics noted the first-quarter estimate was better than the profit of 14 cents per share in the fourth quarter, but lower than first-quarter 2011 earnings per share of 46 cents.

On Thursday, Nucor cited pricing pressure and buyer uncertainty for a first-quarter earnings target in the range of 30 to 35 cents per share - below the analysts' consensus of 69 cents per share.

And AK Steel forecast a net loss of 11 to 15 cents per share, compared with analysts' expectations of a small profit, as it sees shipments falling about 8 percent amid weak demand.

(Reporting By Steve James in New York; Editing by Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)