Steel Mills
Stelco Claims 'Industry-Leading Profit Margins' in Q2
Written by David Schollaert
August 10, 2021
Canadian flat-rolled steelmaker Stelco announced “industry-leading profit margins” and record-setting quarterly results for the second straight quarter in Q2 2021.
The integrated steelmaker’s second-quarter adjusted net income was $380 million Canadian ($303.5 million U.S.) versus C$10 million ($7.99 million) in the year-ago quarter on revenue that soared 123% to C$918 million ($733.2 million).
“We are delivering on the expectations we set at the end of the first quarter and continuing to build momentum and capitalize on the favorable pricing trends and low-cost position that we have created,” said Alan Kestenbaum, Stelco’s executive chairman and CEO in a statement released with earnings data after the close of the market on Tuesday, Aug. 10.
The surge in revenue in the second quarter, outpacing the record results in the prior quarter, came as average selling prices rose to C$1,292 ($1,032) per ton, up 85% from C$700 ($559) per ton in the second quarter of 2020.
Sales volumes were 679,000 tons in the second quarter of this year, up 18% from 576,000 tons in the same year-ago quarter. Gains were even more pronounced for higher value coated products, of which Stelco shipped 142,000 tons in the second quarter, up 30% from 109,000 tons in the second quarter of 2020.
The increase in tonnage sold was attributed in part to upgrades made to the “smart” blast furnace at Stelco’s Lake Erie Works in Nanticoke, Ontario. The investment resulted in higher hot metal and steel production in the second quarter, the company said.
“Even with our record results, we remain focused on further improving our cost structure,” said Kestenbaum. “We are continuing our work to upgrade our Lake Erie Works coke battery… which will reduce our coke production costs and provide our business with a further advantage over our competitors.”
The integrated steelmaker’s 65MW electricity cogeneration project, set for commissioning in the second half of 2022, will reduce electricity costs and further the company’s CO2 reduction efforts.
Stelco’s adjusted EBITDA was C$410 million ($327.5 million) in the second quarter of 2021, and first half revenue totaled C$1.58 billion ($1.26 billion).
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
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