Steel Mills
SDI Guidance Shows Strong Construction Demand
Written by Sandy Williams
September 19, 2020
Steel Dynamics Inc. is expecting third-quarter 2020 earnings to be slightly better than the previous quarter due to stronger results from recycling and steel fabrication operations and lower costs associated with construction of the new mill in Sinton, Texas.
Steel operations earnings are expected to be lower in the third quarter. The division experienced metal spread compression during Q3, which more than offset increased shipments driven by improved automotive and construction demand, said SDI. Lagging price-indexed contracts, which offset lower average scrap costs, resulted in lower average realized quarterly flat roll steel product pricing. SDI notes that pricing stabilized and improved during the second half of the quarter, supported by customer demand and raw material pricing.
The company’s recycling operations are expected to show a meaningful increase in earnings due to higher scrap shipments in response to improved domestic steel production.
Construction demand buoyed SDI’s steel fabrication operations during the quarter. Order backlog remains strong and customers are optimistic about future non-residential projects. “Third-quarter 2020 earnings from the company’s steel fabrication operations are expected to be at or near record results, based on anticipated record shipments and margin expansion as product pricing is expected to improve while steel input costs decrease,” said SDI.
Earnings are expected in the range or $0.42 to $0.46 per diluted share compared to $0.36 per diluted share in the second quarter of 2020. Both the second and third quarter included costs associated with construction of the new flat roll mill in Texas ($0.04 EPS in Q3 vs. $0.08 EPS in Q2). Excluding those costs, adjusted earnings are expected in the range of $0.46 to $0.50 per diluted share for Q3 compared to $0.47 per share in Q2.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
AHMSA opens doors to potential buyers as $1.3B asset auction nears
AHMSA is opening its doors to potential buyers to tour its steel plant and mining operations in northern Mexico in preparation for the next stage of its bankruptcy process: the auction of its assets.
USW seeks clarity on USS 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!