SDI Expects Profitable Q1 Despite Lower Steel Prices Before Ukraine-Russia War

That’s up from $5.49 per diluted share in the fourth quarter and more than double $2.03 per diluted share in the first quarter of 2021, SDI said.

The modest gains come as “significantly lower” profitability from SDI’s steelmaking operations in the first quarter is expected to be offset in part by a record showing from the company’s steel fabrication division.

“Average expected flat roll pricing is expected to decline by more than 10%, more than offsetting anticipated higher shipments and lower average scrap prices,” SDI said.

Some context: Hot-rolled coil prices had fallen to $1,000 per ton at the beginning of March 1, down 37.5% from $1,600 per ton at the start of the year and down nearly 50% from a 2021 high of $1,955 per ton, according to SMU’s interactive price tool.

But the company also noted that sheet prices have “firmed” more recently and that lead times, an advance indicator of steel demand, have also begun to stretch out.

The recent price gains – SMU on Tuesday recorded its biggest week-over-week increase ever – come because of higher inputs costs, a snarled global supply chain, and strong steel demand, SDI said.

Steel prices in the U.S. and in Europe have skyrocketed since Russian forces invaded Ukraine on Feb. 24.

Also weighing on first-quarter profits were costs related to SDI’s new flat-rolled steel mill in Sinton, Texas. The company forecasts they will be $0.30 per diluted share in the first quarter of this year, up from $0.18 per diluted share in the fourth quarter and up from $0.07 per diluted share in the first quarter of 2021.

By Michael Cowden, Michael@SteelMarketUpdate.com