Steel Mills
Record Year for Olympic Steel
Written by Sandy Williams
February 16, 2019
Olympic Steel reported record sales for the fourth quarter and full-year 2018. The metals service center saw net sales jump 29 percent in 2018 to $1.7 billion on higher year-over-year volume and higher average prices in all three of its report segments. Operating income more than doubled in 2018 to $57.1 million, up from $24.0 million in the prior year. Net income soared 78 percent to $33.8 million for Olympic Steel’s third-most profitable year in its history.
Fourth-quarter sales increased 39 percent to $30 million. Operating income for the quarter totaled $1.8 million compared to an operating loss of $2.0 million in Q4 2017. Net income, however, was impacted by higher LIFO expense of $3.7 million and other items resulting in a net loss of $1.3 million for the quarter.
“While 2018 had a number of notable accomplishments, it wasn’t without challenges,” said President David Wolfort. “During the fourth quarter, we experienced an acceleration of negative pricing headwinds that began in late third quarter, as Hot Roll CRU eroded by $100 a ton during the fourth quarter. The pricing headwinds impacted our gross margins in the fourth quarter and have continued into early first quarter 2019.
“We also face challenges from trade disputes and counter tariffs authored by the European Union, Canada and countries whose steel trade has been disrupted by the implementation of Section 232. To counteract these headwinds, we are improving inventory turnover, focusing on reducing operating expenses and planning for lower capital expenditures in 2019.”
Falling steel prices resulted in margin pressure accelerating from October to December, said CEO Richard Marabito. January was similar to December, but Marabito expects imminent margin improvement.
He commented, “We think that we will have a more stable pricing environment. Obviously we have come off from the highs of some of the Section 232-driven price spikes that we saw last year. We are settling in now at a pricing environment that will be a little more consistent and normalized, and I think our margins will be more consistent and normalized as we move forward.
Regarding demand, Wolfort said customers are signaling “high single-digit growth for 2019 to low double-digit growth.”
“In general, we are bullish on 2019 and our large OEM customers in construction, agriculture and industrial production are all signaling growth,” he said.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
USW seeks clarity on plans for Granite City Works
The United Steelworkers union has asked U.S. Steel to elaborate on its Granite City Works plans following reports that the steelmaker is ending processing at the facility.
Nucor maintains plate prices, opens October order book
Nucor aims to keep plate prices flat for a seventh straight month with the opening of its October order book.
ArcelorMittal Mexico to import from sister mills as it works to resume DRI production
ArcelorMittal has partially restarted operations at its direct reduction plant in Lazaro Cardenas, Michoacan. An explosion on Aug. 18 rocked the massive steelworks on Mexico’s Pacific coast, impacting production of direct-reduced iron (DRI).
Fall maintenance outages are coming in hot
Labor Day has passed, the sun is starting to set a little earlier each day, and cooler weather has begun to find its way down to many of us across North America. And you know what that means for the steel industry… Fall maintenance outages!
AISI: Domestic steel production ticks up
US raw steel production ticked up in the week ending on Sept. 6 after a decrease the week before, according to the most recent data from the American Iron and Steel Institute (AISI).