Nucor makes steel by melting recycled scrap metal in electric arc furnaces, then selling that steel to construction companies, manufacturers, and steel service centers across North America. The business runs in three connected pieces: a steel mills segment that generated 62% of external sales in 2025, a steel products segment that turns raw steel into finished goods like joists, decking, racking, and pre-engineered buildings, and a raw materials segment that sources and brokers the scrap and iron inputs the mills need. Customers pay per ton of steel or steel product delivered, which means revenue rises and falls directly with how much gets shipped and at what price. In 2025, Nucor shipped 26.6 million tons to outside customers at an average price of $1,221 per ton. The diagram below traces where the money goes.
Five years of financial data tell a clear story: Nucor rode a steel boom to peak performance in 2021 and 2022, then spent the next three years sliding. Revenue hit $41.5 billion in 2022 and fell to $30.7 billion by 2024 before recovering slightly to $32.5 billion in 2025. That is a meaningful drop. But the more revealing number is gross margin, which measures how much profit is left after the cost of making the steel.
That collapse in margin from 30% to under 12% is not just a bad market cycle. It reflects two things happening at once. Steel prices fell as demand softened in automotive and residential construction. At the same time, Nucor was spending heavily to build new facilities, and those facilities were not yet producing revenue. Pre-operating and start-up costs alone were $496 million in 2025 and $594 million in 2024. Free cash flow, which is the cash left after the company pays for its operations and new equipment, tells the same story.
Net debt also moved in the wrong direction. It fell to just $0.4 billion in 2023, but climbed back to $4.8 billion by 2025. That is still manageable given Nucor carries the highest credit ratings of any North American steel producer, rated A- by Standard and Poor's and Fitch and A3 by Moody's. But it signals that the company is currently spending more than it earns, funding its expansion with debt rather than free cash flow.
The biggest single commitment is a new sheet mill being built in Mason County, West Virginia. The total cost estimate has risen to approximately $4 billion, with Nucor's net cash outlay expected to be approximately $3.65 billion after a $350 million commitment from the State of West Virginia. The mill is expected to be completed by the end of 2026 and will add roughly 3 million tons of annual sheet steel capacity, including advanced automotive and construction grades. Capital spending in 2026 is estimated at approximately $2.50 billion, meaning the spending cycle is not over yet.
That diversification push matters because the core steel business carries serious risks. Three of them are structural, not temporary.
First, trade policy risk is real and structural. Nucor openly acknowledges that steel tariffs are critical to keeping foreign competitors out of the U.S. market. China produced more than one billion tons of steel in 2025 for the eighth consecutive year and exported a record 131 million tons to offset weak domestic demand. That volume depresses global prices. The tariffs currently protect Nucor from the worst of it. But tariff policy can change. Second, scrap prices are volatile and hard to predict. Nucor recycles approximately 20 million gross tons of scrap per year, and scrap is its primary cost. When scrap prices spike faster than steel prices rise, margins compress quickly. Third, Nucor's mills consume enormous amounts of electricity and natural gas. Energy price swings that cannot be passed on to customers directly reduce profitability.
There is also a capital risk that sits on top of all of this. Nucor has committed to roughly $2.50 billion in capital spending in 2026 alone, primarily for the West Virginia sheet mill, new Towers and Structures locations, and a melt shop in Arizona. If interest rates rise or demand stays soft, funding these projects while also returning capital to shareholders through dividends and share repurchases becomes harder. Nucor paid $512 million in dividends and repurchased $700 million of its own stock in 2025, meaning shareholder returns continued even as free cash flow turned slightly negative.
The company's 2026 outlook is cautiously positive. Management expects earnings to increase in the first quarter of 2026 across all three operating segments, with the largest gain in steel mills driven by higher volumes and higher realized prices. Steel mill backlogs at the end of 2025 were described as being at historically high levels. Whether that signals a genuine demand recovery or simply a timing effect from restocked inventories is not yet clear.
Nucor's lower-carbon production method has become a commercial argument, not just an environmental one. The company markets steel under its ECONIQ brand as net-zero carbon steel and launched ELCYON steel plate specifically for wind energy producers. The new West Virginia sheet mill is designed to have lower greenhouse gas intensity than blast furnace competitors who have historically served that region. New carbon regulations could increase costs across the whole industry, but Nucor believes its electric arc furnace method gives it a relative advantage if that happens.