On Monday, Steel Dynamics announced a quarterly cash dividend of $.10 per common share payable on or about October 14, 2011. At the same time the company advised third quarter earnings to be in the range of $.18 to $.22 per diluted share which is higher than 3Q 2010 but lower than the $.43 earned in 2Q 2011.

The reason for the forecasted drop in earnings in the current quarter is due to poor flat rolled demand levels. Steel Dynamics made the following statements in their guidance press release:

“…Despite the continuation of relatively low service-center inventory levels, flat rolled demand during July and August did not materially improve, pricing remained a challenge, and the cost of raw materials, specifically steel scrap, did not decline in step with steel prices, all of which resulted in reduced third quarter margins. In contrast, earnings contributed by the company’s long product steel operations for the third quarter are expected to improve based on increased volumes and expanding margins, most notably for the company’s special-bar-quality steels.

Earnings from the company’s metals recycling and ferrous resources and fabrication operations are expected to be consistent with those achieved in the second quarter 2011. Overall, renewed uncertainty within the U.S. and global economies continues to negatively impact corporate and consumer spending, resulting in a challenging demand environment. The company believes if more economic clarity develops throughout the remainder of the year, demand could be expected to increase, along with steel pricing and margins which have already started to move, with the potential to positively impact fourth quarter results, given the low levels of existing inventories throughout the supply chain.”

(Source: Steel Dynamics)

Steel Dynamics and other domestic steel mills began raising prices during the month of August. The total of the domestic price increases on flat rolled steels is approximately $100 per ton. Not all of the increases have been realized as of today but the mill pricing has been rising as of late and should be reflected in September/October production.