U.S. steel makers are clawing their way back. Soft demand and tough foreign competitors are partly to blame. Nucor Corp. (NUE), the country’s largest steel maker, is especially notching solid gains. It operated at 80 percent rates in the first quarter, compared to 73 percent last year.

The Charlotte, North Carolina-based company produces structural steel, bar steel, and other products used by contractors to build highways, bridges, and other structures. Residential demand is still weak, says Nucor CEO Daniel DiMicco. But he sees growth in the energy area, which uses steel products for oil pipelines.

In the first quarter, Nucor’s revenues shot up 32 percent to $4.83 billion, fueled by steel price gains of 22 percent. Earnings per share rose to 56 cents in the quarter versus 15 cents a year ago, handily beating the Zacks Consensus Estimate.

But is Nucor a buy now? DiMicco says that steel demand will rise 14 percent in 2011. Even if it doesn’t, Nucor pays you handsomely to wait. Its dividend currently yields 3.4 percent. Over the past five years, Nucor’s shareholder return was a hefty 371 percent.

Steel prices could soften

On the downside, steel making is highly competitive. China now controls nearly half the market. CIBC Worldwide Markets analysts recently downgraded Nucor to underperform, citing possible price drops on steel as competition heats up.

Twelve analysts tracked by Thompson/Firstcall give Nucor mixed reviews. Two have strong buys, with 3 buys, 5 holds and 2 underperforms.