Nucor Corporation NUE has slashed its first-quarter 2015 guidance owing to higher levels of imports and challenging conditions in energy markets. The company now expects its first-quarter 2015 earnings to lie in the band of 10–15 cents per share.

Moreover, the anticipated earnings range for first-quarter 2015 is lower than the earnings per share of 35 cents recorded in the first quarter of 2014 as well as fourth-quarter 2014 earnings per share of 65 cents.

The forecast is lower than the guidance that the company had previously announced along with its fourth-quarter 2014 results. Nucor had earlier said that it sees earnings in the first quarter to be below the fourth-quarter level, but modestly up from first-quarter 2014.

Shares of Nucor fell 6.4% following the announcement to close the day at $46.10.

Overall operating performance at Nucor’s steel mills segment is anticipated to decline in the first quarter of 2015 mainly due to exceptionally high levels of imports, leading to a drop in steel prices and contraction in margins. Total imports surged 38% year over year in 2014, with imports accounting for nearly 34% of total domestic shipments in the year.

Imports witnessed a rise throughout 2014. Moreover, imports in the second half of 2014 increased 10% over the first half. This rise in imports has trickled down in 2015, with total imports in Jan 2015 accounting for 39% of total domestic shipments in the same month. This represents a 37% rise from Jan 2014. Nucor considers global overcapacity built by government-owned enterprises to be the biggest threat to its business.

Though steel prices are falling due to high imports, the sheet market is seeing the biggest impact. Sources reveal that prices of hot-bands have decreased 11% at end-2014 from their peak level in the third quarter. Prices have decreased further by 19% through mid-Mar 2015 Nucor sees an expansion in margins in the steel mills segment as it starts to gain from lower raw material costs. Nucor, however, anticipates that import levels will continue to remain at a higher level even after subsiding in the second quarter.

Due to falling oil prices in the energy markets and increasing imports of oil country tubular goods products, the pipe and tube sector are experiencing a surplus in inventory. However, Nucor foresees sustainable improvements in the automotive markets and a rise in demand in non-residential construction markets. The company also thinks that once the volatility in energy markets and steel inventories stabilizes, total steel demand will be in line or exceed 2014 levels.

Nucor expects overall operating performance in the downstream products segment in first-quarter 2015 to decrease sequentially but increase year over year. This is owing to cheaper raw materials and improvement in volumes, supported by the steady growth in non-residential construction markets.

Nucor also expects operating performance in the raw materials segment to decrease sequentially owing to the operating loss of around $37 million at Nucor Steel Louisiana and poor performance of its scrap processing business and natural gas drilling works.

Nucor anticipates its first-quarter 2015 results to include an estimated LIFO credit of $16 million or 3 cents per share, compared with a LIFO credit of $57.3 million (or 11 cents per diluted share) in fourth-quarter 2014 and a charge of $14.5 million (or 3 cents per diluted share) in the year-ago comparable quarter.

Nucor is on its way to complete the necessary repair and maintenance works at its Steel Louisiana plant where operations are suspended since Nov 2014. The company expects the plant to be operational by the end of the first quarter of 2015.

Nucor currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked companies in the steel industry include Kobe Steel Ltd. KBSTY, ThyssenKrupp AG TYEKF and Companhia Siderurgica Nacional SID. While Kobe Steel and ThyssenKrupp sport a Zacks Rank #1 (Strong Buy), Companhia Siderurgica carries a Zacks Rank #2 (Buy).