Steel Mills

SDI guides toward lower Q3 earnings on weaker flat-rolled steel prices

Written by Michael Cowden

September 16, 2024

Steel Dynamics Inc. (SDI) expects lower third-quarter earnings on the heels of “meaningfully lower” prices at its flat-rolled steel operations.

The Fort Wayne, Ind.-based steelmaker expects Q3’24 earnings of $1.94 to $1.98 per diluted share, according to figures released on Monday. That’s down from $2.72 per share in Q2’24 and $3.47 per share in Q3’23.

The drop in realized prices in Q3 partly stems from 80% of SDI’s flat-rolled steel business being contract-based. Recall that contract pricing lags spot prices.

What does that mean in practice? Spot prices for hot-rolled (HR) coil bottomed in the low $600s per ton in Q2, according to SMU’s pricing records. Those lower spot prices in Q2 then pulled down contract prices in Q3.

However, SDI suggested that things could improve in Q4, given that flat-rolled steel prices have stabilized and improved in Q3. And “underlying demand remains steady,” the company added.

On the scrap side, SDI said Q3 results would probably be similar to those for Q2. That comes thanks to “steady” volumes offsetting “marginally lower” prices.

SDI expects a “slight decline” in prices for its fabricated products in Q3. Fabrication backlogs are “steady” and extend into the first quarter of 2025.

The company said its fabrication business could improve in 2025 on anticipated interest rate declines, government-supported infrastructure spending, and reshoring. Those trends should support not only fabricated products such as joists and decking but also flat-rolled and long steel products, it added.

SDI plans to release Q3 earnings after the close of markets on Wednesday, Oct. 16. Its earnings conference call will be on Oct. 17 at 11 a.m. ET. SMU will cover both.

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.

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