Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/a699ee7eaba34137f27d057f8721cb7b.jpg)
SDI Says Scrap Prices at Bottom
Written by Sandy Williams
October 20, 2015
Steel Dynamics reported decreased third quarter profit as a result of high levels of low priced imports and elevated domestic inventory. SDI posted net sales of $2.0 billion for a net income of $61 million in Q3. The three percent drop in sales was due to lower pricing and reduced volume in the recycling and flat rolled segments.
Steel sales totaled $1.35 billion for the quarter on shipments of 2.25 million tons. Average sales price per ton was $665 and steel production utilization was 82 percent, down from 87 percent in Q2. Flat rolled shipments decreased four percent from Q2 to 1.54 million tons.
During the company earnings call, CEO Mark Millet noted that import levels have eased somewhat recently and the ongoing trade cases should reduce them further. Inventory levels are significant, especially for HRC which is currently seeing the most market weakness.
When asked about the trade cases during the earnings conference call, Millet said, “Generally our impression or our thought belief is that trade cases are going to be positive, varying duties to varying countries. But nonetheless a positive for our industry and imports will recede and we’ve already seen. I think the corrosion-resistant import licenses were down, actually imports were down and then the licenses were down quite dramatically. So they will have an effect.”
Scrap prices declined further in third quarter but SDI believes it pricing reached bottom and will continue sideways for the next several months. Declining scrap prices and high inventories has resulted in “hesitant ordering,” said Millet. As scrap prices stabilize and inventories normalize into 2016, domestic steel production is expected to improve. Margin expansion is not likely in the fourth quarter, said Millet, but he sees a positive pricing environment going into 2016.
The Columbus facility has had success in diversifying its product offerings, gaining 94 new customers in third quarter. Columbus, with a high dependence on the energy market, is making gains in the automotive and construction industry through valued added products. The new paint line and galvalume addition at Columbus will be operational Q1 2017, adding 250,000 tons of annual coating capability.
The fabrication operations were a strong segment for SDI in Q3 with a 17 percent increase in shipments. Operating income rose 30 percent sequentially to $37 million. SDI reports its cold rolled and galvanizing lines are running at 98 percent capacity.
Steel Dynamics expects a weak fourth quarter for the steel industry.
“We believe the current elevated level of domestic supply chain inventory, combined with the continuation of excessive steel imports and typical fourth quarter seasonality, could further erode domestic steel industry profitability in the fourth quarter 2015,” said Millett. “While underlying steel demand in certain market sectors remains steady and import levels have somewhat declined, the issue of steel imports persists.”
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/sandy-williams.jpeg)
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/stelco.png)
Steel Summit 2024: Stelco CEO reflects on strategy, growth, and sale to Cleveland-Cliffs
In a candid fireside chat with SMU Senior Analyst/Editor David Schollert, Stelco’s CEO Alan Kestenbaum opened up about Stelco’s pending sale to Cliffs, his business strategy, outlook for the industry, and plans for the future. The chat took place on Tuesday, Aug. 24, at the 2024 SMU Steel Summit in Atlanta.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/AISI.png)
AISI: US steel shipments unchanged in July vs. June, down on-year
Domestic steel shipments remained nearly flat in July month over month but fell from a year earlier.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/white_house.png)
Media reports: Biden could block USS sale on national security concerns
President Joe Biden could block the $15-billion sale of U.S. Steel to Japan's Nippon Steel by citing national security concerns That’s according to reporting in the Washington Post and the Financial Times that was later picked up by the New York Times as well as in wire services.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/US_Steel.png)
USS threatens to cut ‘thousands’ of jobs, move HQ if Nippon sale blocked
U.S. Steel could slash thousands of jobs, shift away from integrated steelmaking, and move its headquarters out of Pittsburgh if its acquisition by Nippon Steel isn’t completed, the company’s top executive said. “We want elected leaders and other key decision makers to recognize the benefits of the deal was well as the unavoidable consequences if the deal fails,” company President and CEO David Burritt said in a statement on Wednesday.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/SSAB.png)
CRU: SSAB to expand Mobile plate mill
SSAB plans to spend $12 million to boost production capacity at its electric-arc furnace (EAF) plate mill in Mobile, Ala. The Sweden-based steelmaker will do that by expanding the existing furnace there. Shot blast equipment will also be upgraded. The expanded capacity is expected to come online late next year. The mill currently has an […]