Steel Mills

SDI Flat Roll Operations Drive Stronger Profits for Q3

September 20, 2016

Steel Dynamics expects stronger profits in third quarter due to meaningful metal spread expansion. In the company’s third quarter guidance, SDI said higher steel pricing in Q3 will more than offset higher scrap prices, however, improved margins will be impacted by lower steel shipments across the product platform.

Higher earnings for third quarter are driven by the SDI’s flat-roll operations. Demand is still challenged in heavy equipment, agricultural and energy sectors but automotive remains strong and construction showing gradual improvement.

Metals recycling profits are expected to be lower due to declining shipments of ferrous and non-ferrous scrap. A ferrous metal spread contraction is expected from falling market prices in the second half of third quarter.

Fabrication is experiencing steady demand from nonresidential construction and shipments are expected to remain consistent with product pricing higher than Q2. Higher raw material flat roll steel costs are expected to result in metal spread compression and earnings sequentially for fabrication.