Service Centers

Steel pricing pressure squeezes Reliance's Q2 earnings
Written by Laura Miller
July 25, 2024
Second quarter ended June 30 | 2024 | 2023 | Change |
---|---|---|---|
Net sales | $3,643 | $3,880 | -6% |
Net earnings (loss) | $268 | $385 | -30% |
Per diluted share | $4.67 | $6.49 | -28% |
Six months ended June 30 | |||
Net sales | $7,288 | $7,846 | -7% |
Net earnings (loss) | $571 | $768 | -26% |
Per diluted share | $9.90 | $12.92 | -23% |
Reliance Inc. said a faster-than-expected decline in carbon steel prices offset higher shipments in the second quarter.
In its Q2’24 earnings results released on Thursday, the Scottsdale, Ariz.-based service center group reported a 30% year-on-year (y/y) drop in net income to $268 million on sales that declined just 6% to $3.64 billion.
While carbon steel shipments increased 6% from last year to 1,274,000 short tons, average selling prices dropped 10.5%.
Reliance said the decline in carbon steel pricing was more than anticipated as Q2 progressed. While prices continue to decline, President and CEO Karla Lewis said on a call with analysts on Thursday that “normal to short” lead times on most major products are helping the company work through higher-priced inventory a little faster.
“While we are continuing to execute through near-term headwinds in demand and pricing affecting certain of our markets, we remain excited about the opportunities that lie ahead and are confident in our talented team’s ability to successfully continue executing our robust and resilient business model,” Lewis concluded.
Outlook
Reliance noted y/y demand improvement from its largest end market, non-residential construction, and expects steady demand to continue through Q3. However, steel products going to that sector – carbon steel tubing, plate, and structural – will continue to see pricing pressure, said EVP and COO Steve Koch on Thursday’s call.
Lower carbon steel prices will be the primary driver of an expected 2% to 4% reduction in Reliance’s average Q3 selling prices.
Commenting on the company’s pricing outlook, Lewis said that “it does, for the most part, reflect where prices are currently, not anticipating significant declines from where we are today.”
Total tonnages sold in Q3 are expected to decline 2.5% to 4.5% sequentially due to normal seasonal factors, including planned customer shutdowns and vacations.
With most of the end markets Reliance serves showing demand improvement from last year, the y/y growth in Q3 tons sold should be 4.5% to 6.5%, the company said.

Laura Miller
Read more from Laura MillerLatest in Service Centers

Olympic Steel taps Norred for GM role in Georgia
Olympic Steel Inc. has appointed Larry N. Norred, Jr. to the role of general manager for its Buford (fabrication) and Winder (metal processing) operations in Georgia.
Nova Steel acquires Sheffield Steel Products
Canada's Nova Steel has fully acquired all of the assets of Ohio's Sheffield Steel Products.

Jack Biegalski joins Esmark Steel Group as CEO
Jack Biegalski, former president and CEO of American Heavy Plates, has been named the new CEO of the Esmark Steel Group.

Casey to lead Olympic’s manufactured metal products business
National service center chain Olympic Steel has made an internal promotion to fill the newly created role of director of manufactured metal products.

Russel Metals acquiring Kloeckner Metals centers to increase US presence
The seven facilities Russel agreed to purchase are located in Iowa, North Carolina, Georgia, Texas, and Florida.