Steel Mills
SDI Guidance Expects Lower Profit in Q4
Written by Sandy Williams
December 16, 2015
Steel Dynamics expects reduced profitability from its steel operations in fourth quarter compared to third. Lower steel shipments, customer destocking and seasonal demand weakness are impacting the steel platform and, in particular, commodity grade hot roll products. Lower steel pricing will offset any benefits from lower ferrous scrap costs.
Fabricated steel joist and decking products continue to have strong demand indicating a positive trend for non-residential construction. Fabrication shipments are expected to be higher than third quarter shipments but average pricing will be lower due to market conditions and a shift in product mix. Profitability for fabricated is expected to decrease, despite improved volume, due to the lower average pricing.
The metals recycling segment is expected to show a loss based on lower shipments and metal spread compression. Steel mill demand is down for ferrous scrap, resulting in a $65 to $70 per ton drop in pricing between the end of September and end of November. SDI anticipates an impairment charge in Q4 for its metals recycling operations but the amount has yet to be determined.
Commenting on commodity markets, heavy equipment, agricultural and energy remain challenged, said SDI. Automotive continues to be strong and construction continues to improve
Despite lower earnings, SDI, expects to generate cash flow of more than $200 million in Q4, resulting in record high liquidity for 2015. SDI provided earnings guidance in the range of $0.03 to $0.07 per diluted share, compared to sequential third quarter 2015 earnings of $0.25 per diluted share and prior year fourth quarter adjusted earnings of $0.40 per diluted share.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
USS confirms split CFIUS decision on Nippon deal; it’s now up to Biden
Nippon Steel's purchase of U.S. Steel could lead to lower steel output domestically, and that presents “a national security risk," the Washington Post reported.
USS/Nippon deal: Who will have the happiest holidays?
Will Santa bring gifts for the leadership, employees, and shareholders of U.S. Steel and Nippon Steel, and lumps of coal for USW leadership and politicians opposed to the deal?
‘Orderly liquidation’ of AHMSA assets begins
A trustee has formally taken over AHMSA and begun the liquidation process of the bankrupt Mexican steelmaker.
Nippon buying stake in Canadian iron ore project
Nippon Steel and a Japanese trading company have entered an agreement to buy a 49% interest in a Champion Iron ore project in Canada.
USS anticipates Q4 loss on weak demand, BR2 start-up
Amid a challenging pricing and demand environment, and with the ongoing ramp-up of the Big River 2 mill, USS is anticipating a loss for the fourth quarter.