SDI joins Nucor in profit rise forecast

Fort-Wayne, Indiana-based Steel Dynamics Inc. (SDI) says expects second-quarter 2023 earnings in the range of $4.78 to $4.82 per diluted share, which would represent a rise of more than $1 per share, or about 30 percent, from the $3.70 per diluted share earned in the first quarter. The scrap-fed electric arc furnace (EAF) steelmaker joins fellow EAF producer Nucor Corp. in predicting a healthier second quarter.

In last year’s second quarter, SDI earned $6.44 per diluted share, but it has been unable to scale those heights of profitability this year.

The company says its second-quarter 2023 profitability stems in part from significant metal spread expansion across the platform as realized selling values more than offset moderately higher scrap costs.

SDI also expects its Sinton, Texas, flat-roll steel mill to be earnings before interest, taxes, depreciation and amortization (EBITDA) positive this quarter as that facility continues to ramp up.

“Steel order activity remains solid from the automotive, construction, industrial and energy sectors,” SDI states. The steelmaker also points to recent positive data from the steel service center sector as meaning low customer inventories could help support steel product pricing in the near term.

SDI says second-quarter 2023 earnings from its metals recycling operations, consisting primarily of the OmniSource network of scrap yards, are expected to be steady compared with sequential first-quarter results, based on increased ferrous scrap shipments offsetting lower metal spread.

The firm says its downstream steel fabrication operations earnings are expected to be historically very strong this quarter but lower than the previous quarter’s results.

SDI says its order book “continues to be steady, and the order backlog is strong with robust forward-pricing for the company’s steel fabrication platform.”

In its wider steel-consuming economic sectors, SDI says, “The nonresidential construction sector remains solid, as further evidenced by the strength in the company’s demand for its long product steels.

“The continued onshoring of manufacturing, coupled with the strong United States infrastructure program and industrial build-outs, supports strong demand in the coming years.”