Steelmakers say profits are slimmer at year’s end

Within a week of an earlier warning from America’s largest electric arc furnace (EAF) steelmaker Nucor Corp. predicting slimmer profits in the fourth quarter of this year, two more steelmakers have chimed in with similar announcements.

Indiana-based Steel Dynamics Inc. (SDI), like Nucor, a scrap-fed EAF producer, has predicted fourth quarter 2024 earnings in the range of from $2.60 to $2.64 per diluted share. That will be down about 25 percent from the company’s third quarter 2023 earnings of $3.47 per diluted share and around 27 percent from last year's fourth quarter earnings of $3.61 per diluted share.

“Fourth quarter 2023 profitability from the company’s steel operations is expected to be lower than sequential third quarter results, based on steady shipments and metal spread contraction as lower realized flat rolled steel pricing more than offset lower scrap costs," SDI says.

“Fourth quarter 2023 earnings from the company’s metals recycling operations are expected to be comparable to sequential third quarter results, based on pricing-related metal spread expansion more than offsetting lower volume, as demand from domestic steel mills declined due to maintenance outages," the company adds of its raw material operations, including its OmniSource network of scrap yards.

While its profits are down, SDI's mills remain active. “Steel order activity remains solid, as evidenced by extended order lead times and recent pricing increases heading into the first quarter of 2024," the company says.

SDI plans to release its fourth quarter 2023 and full-year earnings Jan. 23, 2024, with an earnings conference call to be held the next day.

Pittsburgh-based United States Steel Corp. has issued a statement predicting fourth quarter 2023 adjusted net earnings per diluted share guidance of from 20 to 25 cents per share. That figure will be down by 80 percent or more from the $1.40 adjusted net earnings per diluted share from the prior quarter.  

The company, which is one of two remaining U.S. blast furnace operators and also operates EAF capacity in Arkansas, is in the midst of considering bids offering to buy some or all of its steelmaking assets. Last month, the company idled a blast furnace in Illinois.

“We successfully navigated the impact of the auto workers’ strike to our domestic flat-rolled order book," U.S. Steel President and CEO David B. Burritt says. "Our diverse order book allowed us to repurpose tons impacted by the strike to other customers. We focus on the things we can control and expect to deliver another quarter of strong safety, environmental, and operational performance.”

The company says its EAF-focused minimill segment, which centers on its Big River complex in Arkansas, will yield adjusted earnings in the fourth quarter expected to be lower than in the prior quarter.

“Average selling prices are expected to decline sequentially, reflecting the segment’s majority market-based monthly contract and spot exposure,” the company says. “Additionally, the minimill segment incurred costs related to a planned maintenance outage in October. Separately, approximately $10 million of anticipated construction-related costs for in-flight strategic projects at Big River Steel are included in the segment's adjusted results. These headwinds are expected to be partially offset by benefits from lower raw material costs. “

Burritt points to positive conditions, saying, “Looking ahead, domestic steel markets are improving, customer demand is growing and spot selling prices are increasing.”

The company also has produced the first pellets from its Keetac direct reduced-grade pellet, or direct-reduced iron, investment in Minnesota on time and on budget. “In 2024, we expect to complete the remaining strategic investments, including our dual coating line at Big River Steel and our new state-of-the-art Big River 2 minimill," Burritt says.