Steel Mills
Steel Dynamics Guides to Lower Earnings in Q4
Written by Sandy Williams
December 19, 2017
Steel Dynamics Inc. provided guidance on fourth-quarter earnings, predicting a lower sequential quarter. Planned outages at the company’s flat rolled divisions resulted in higher costs and lower value-added shipments, reducing pretax earnings by approximately $27 million.
Flat rolled steel pricing declined at a steeper rate than prices for scrap raw material. The long products division saw merchant steel volume under pressure from “excessive prefabricated steel imports and excess domestic production capability.”
Earnings for the metals recycling division are expected to be similar to the third quarter. Although ferrous scrap earnings declined, nonferrous earnings improved.
Record shipments and a higher average sales price will result in moderate improvement in SDI’s fabricated steel joist and deck products. Demand for products remains strong in what is normally a slower quarter, the company said.
SDI earnings were also impacted by an expense of $7 million related to debt refinancing.
“Despite a lower sequential fourth-quarter earnings result, we remain confident that macroeconomic and market conditions are in place to benefit domestic steel consumption in 2018,” said Mark D. Millett, President and Chief Executive Officer. “Domestic steel inventory levels have moderated as the overhang from “pre-232″ imports has dissipated. World steel demand and pricing have structurally improved and domestic steel demand remains healthy. We believe North American automotive steel consumption will be steady, and we continue to gain momentum in that sector. We also believe that there will be continued additional growth in the energy and construction sectors, including heavy equipment. In combination with our own SDI initiatives, we believe there are firm drivers for growth in 2018.”
Sandy Williams
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