Steel Dynamics nets $900M in most recent quarter

Fort Wayne, Indiana-based Steel Dynamics Inc. (SDI) has announced third quarter 2022 net income of $914 million, or $5.03 per diluted share. That compares with a $6.44 per share figure in the prior quarter but is up from $4.85 per share one year ago.

“The team delivered a strong performance during the quarter,” says Mark D. Millett, chair, president and CEO of SDI. “These results continue to display the power of our highly diversified, value-added, circular manufacturing model — as the strength in our steel fabrication operations meaningfully offset lower earnings in our flat-rolled steel businesses, with realized flat-rolled steel selling values declining almost 15 percent during the quarter.”

Despite wider economic concerns centered on inflation and higher interest rates, Millett says demand for SDI’s steel products remains strong. “We achieved record quarterly steel shipments of 3.2 million tons, as a result of steady steel demand, led by the construction industry and complemented by the automotive, industrial and energy sectors.”

SDI says third-quarter 2022 operating income from its metals recycling operations “meaningfully declined sequentially to $10 million, as a result of lower sequential ferrous and nonferrous scrap pricing and lower volume.”

The scrap-fed electric arc furnace (EAF) steelmaker says its “realized average ferrous scrap pricing” declined almost 30 percent during the third quarter. SDI says it “believes scrap prices have stabilized for the remainder of the year.”

SDI cites “metal spread compression” for third-quarter 2022 operating income in its steel operations that declined more than 50 percent compared with one year ago, to $658 million, “despite record volume.”

Millett says, “Ferrous scrap pricing indices have decreased each month beginning in May and continued through October 2022, resulting in significantly lower earnings from our metals recycling operations. In contrast, our steel fabrication business achieved another record quarter, with earnings of $677 million, based on higher realized selling values, declining steel input costs and a continued steady construction demand environment.”

Looking ahead, he comments, “Customer order entry activity continues to be healthy across our businesses, with expectations for seasonally moderated volume for our steel and metals recycling operations in the coming months. Despite weaker flat-rolled steel pricing, our order activity and backlogs remain solid. We believe North American steel consumption will remain steady and that demand for lower-carbon, U.S. produced steel products coupled with lower imports will support steel pricing.”

Regarding SDI’s newest mill, Millet says, “Operations continue to ramp up at our Sinton Flat Roll Steel Division. The product surface quality is excellent, and grade development and dimensional tolerances have exceeded our expectations. The Sinton team has been running at a rate of 65 percent during October and achieving rates of over 80 percent for several single-day periods, supporting our expectations to achieve a run rate of at least 80 percent for the full year 2023.”

Millett also has provided an update on SDI’s venture into aluminum, commenting, “We are quickly progressing on our aluminum flat-rolled products mill and are incredibly excited about this meaningful growth opportunity, which is aligned with our existing business and operational expertise.”

He continues, “We have intentionally grown with our customers’ needs, providing efficient sustainable supply-chain solutions for the highest quality products. Thus far, this has primarily been achieved within the carbon steel industry — however, a significant number of our carbon flat-rolled steel customers are also consumers and processors of aluminum flat-rolled products. We are pleased to further diversify our end markets with plans to supply aluminum flat-rolled products with high recycled content to the countercyclical sustainable beverage can industry, in addition to the automotive and industrial sectors.”

Millett concludes, “We believe there are strong drivers for our continued growth, and we remain in a position of strength. Our planned investments in a new state-of-the-art low-carbon aluminum flat-rolled mill and associated recycled aluminum slab centers continues our strategic growth, is aligned with our core steelmaking and recycling platforms, benefits many of our existing customers and provides for future value creation. We are well-positioned for sustainable long-term growth.”