Construction projects beyond data centers are on the rise, impacting the U.S. steel sector. Nucor stock has surged, outperforming the S&P 500 with a 42.8% year-to-date return. Steel sector catalysts could push Nucor stock higher, but increased capacity may affect steel pricing and profitability for companies like Nucor.

Amidst a construction cycle boosting the steel sector, Nucor anticipates growth from data center construction. Eli Lilly’s $6 billion, 4-plant expansion plan includes a new facility in Huntsville, Alabama, near Nucor’s Decatur mill. However, increased supply plans could lead to lower steel prices, impacting profitability.

Nippon Steel’s U.S. Steel subsidiary plans a new $4 billion steel mill, adding 3 million tons of annual domestic capacity. While new mills take years to build, the expansion could drive steel prices down. Nucor’s efficiency and profitability make it less vulnerable to pricing fluctuations, but investors should monitor capacity increases.

Nucor’s profitability may be impacted as domestic steel capacity increases. While lower steel prices could hurt domestic mills like Nippon’s U.S. Steel more than Nucor, investors should consider potential risks. The Motley Fool’s Stock Advisor team suggests alternative stock options for potential high returns, separate from Nucor.

Investors should be cautious as steel sector demand and supply dynamics shift. Nucor’s efficiency may offer some protection against pricing fluctuations, but increased capacity could impact profitability. The Motley Fool advises on alternative stocks for potential high returns, separate from Nucor.

Read more at Yahoo Finance: What Every Nucor Investor Should Know Before Buying