(NYSE: NUE) is an industry-leading steelmaker, utilizing a vertically integrated business model. That means it has scrap-metal operations, makes commodity steel, and uses its own steel to create fabricated products. That last segment has been increasingly important to the company's success, and long-term investors need to understand just how valuable it is.

The first thing to understand about the steel industry is that it is highly cyclical. Demand tends to ebb and flow along with economic cycles. Steel is a commodity, so the prices that Nucor fetches for its steel can be highly volatile, leading to material swings on the top and bottom lines.

Then there are the inputs into the steel process, which are also commodities (like scrap metal). So costs can be volatile, as well.

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Source Fool.com