Steel Mills
Ryerson Expects Drag on Business from Coronavirus
Written by Sandy Williams
March 8, 2020
“Beyond seasonally subdued,” is how Ryerson Holding CEO Eddie Lehner described demand in the fourth quarter of 2019. Ryerson shipped 541,000 tons last quarter, down 6.2 percent year-over-year and 9.5 percent lower than in the third quarter. Revenue decreased 17.1 percent to $961.5 million compared to Q4 2018 and net income was $26.4 million. Average selling price dropped 11.6 percent to $1,777 per ton.
“Beginning with the third quarter of 2018, we are now six quarters through the most recent industrial metals counter cycle characterized by falling industrial metal prices, contracting industrial metals demand and compress margins. The average duration of these counter cycles over the past decade has been approximately seven quarters,” said Lehner.
“Consequently, we expect increasing probabilities of improving macro conditions as we move through 2020 depending on the impacts from external events such as the coronavirus whose impact to the economy is yet to be determined.”
Ryerson has several operations in China that have been affected by the coronavirus but, as of now, no Ryerson China colleagues or their immediate families have contracted the virus. Ryerson estimates that first-quarter China revenues will decrease by $15 million compared to Q1 2019 and shipments will decline by approximately 20,000 tons.
“We have been in contact with our China team every day,” said Lehner. “We have firsthand accounts of what’s going on inside of the country and, so far, things are slowly gearing back towards normalcy. It’s going to take a little bit of time for those knots to get untied. But based on what we can see, it looks like by the end of April a lot of the lost operational capacity and throughput should be restored unless virus conditions worsen.”
Lehner said it is too early to quantify what the impact of the virus will be on the North American business, but he anticipates the virus will be a “drag on sentiment and business activity.” The impact will likely affect the service side more than manufacturing. “It looks to be about a one-month to three-month arc, and I think we just have to look at it day by day,” added Lehner.
Kevin Richardson, president of the South-East region, added that the company has received quite a few calls from OEMs asking for verification that supply chains are not at risk. The concern is mostly about components coming in from overseas, he added. “Without question there’s been a lot of canceled conferences and meetings. So, from a travel perspective, that’s definitely taking hold in the economy, but nothing directly in terms of manufacturing.”
For the first quarter of 2020, Ryerson anticipates revenues of $1.03 billion to $1.07 billion, driven by the normal seasonality patterns but mildly tempered by weaker manufacturing demand that has carried over from the second half of last year. Carbon prices have increased sequentially, but stainless steel surcharges and aluminum prices continue to decline.
Ryerson expects average selling prices in the first quarter to be flat to up 2 percent compared to the fourth quarter due to recovering carbon pricing, lower China shipments, and higher transactional shipment volumes.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Nucor shuttering Chicago tubular facility
Nucor is closing its Nucor Tubular Products Chicago facility and will be laying off 47 workers.
Algoma foresees narrow profit (or loss) in fiscal Q2’25
Canadian flat-rolled steelmaker Algoma predicts that it will be roughly breakeven on an adjusted EBITDA basis in the second quarter of its fiscal year. The Sault Ste. Marie, Ontario-based company expects adjusted EBIDTA in a range from a gain of $5 million CAD ($3.7 million USD) to a loss of $5 million CAD in fiscal Q2'25.
Arbitration board sides with USS over USW on Nippon deal
A board of arbitration has ruled in favor of U.S Steel vs. the United Steelworkers (USW) union in a dispute regarding Nippon Steel’s more than $14-billion proposed deal for the Pittsburgh-based steelmaker.
USS first to get nod to sell ‘ResponsibleSteel’ items at Big River
U.S. Steel is the first steelmaker in the world qualified to sell its products as “ResponsibleSteel Certified Steel” at its Big River Steel operation in Osceola, Ark.
USS: No production impact from Midwest Plant fire
A transformer caught fire at U.S. Steel’s Midwest Plant in Portage, Ind., on Sunday.