Steelmakers offer optimistic guidance

Two more United States-based steel producers have joined Nucor Corp. in offering second quarter 2022 earnings guidance that point to the likelihood of sizable profits.

Fort Wayne, Indiana-based electric arc furnace (EAF) mill operator Steel Dynamics Inc. (SDI)  is referring to “record second-quarter 2022 earnings guidance” it places in the range of $6.33 to $6.37 per diluted share.

Pittsburgh-based U.S. Steel Corp. is likewise pointing to “a new all-time best second-quarter performance” in the current timeframe. The operator of both blast furnace/basic oxygen furnace and EAF mills is predicting second quarter 2022 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $1.6 billion, or in the range of $3.83 to $3.88 per diluted share.

EAF producer SDI says its profits exclude the impact from costs associated with the startup of the company’s Sinton, Texas, flat roll steel mill.

Second-quarter 2022 earnings from the company’s metals recycling operations, which includes those of subsidiary OmniSource Corp., are expected to be “significantly higher than sequential first-quarter results, based on strong demand supporting increased shipments and higher pricing,” says SDI.

SDI’s second-quarter 2022 profitability from its steel operations is expected to be historically strong but lower than first-quarter 2022 results in light of lower earnings from the company’s flat roll steel operations, as lower average flat-roll steel pricing is expected to more than offset increased flat roll steel shipments.

Demand for SDI long steel products is strong, says SDI, “supporting increased average realized pricing and expected record shipments for the company’s Engineered Bar Products, Roanoke Bar, and Structural and Rail steel divisions.

David B. Burritt, president and CEO of U.S. Steel, comments, “We expect to continue delivering record performance in the second quarter, with each business segment meaningfully contributing to profitability. Our broad end-market exposure keeps our business resilient with demand across a diverse customer base, including the resurging energy market. Our focus on strategic end markets and the continued realization of significantly increased fixed-price contracts is again expected to generate another quarter of record performance.”

Commenting on the company’s capital allocation strategy, Burritt continues, “Our balance sheet remains strong with an overfunded pension plan and no significant debt maturities until 2029. Our strategic projects are pre-funded, with a current cash position approaching $3 billion, and we accelerated our stock buybacks in the second quarter. We continue to invest in the business with high confidence and are well-positioned to execute on our Best for All strategy and capital allocation framework.”