SDI Posts Record Q4 and Annual Profits in '21, Sees Strong '22 Demand

The company did not directly address a steep drop in prices that occurred in the fourth quarter and has continued into the first.

“We believe North American steel consumption will experience steady growth, supported by the construction, automotive and industrial sectors,” SDI President and CEO Mark Millett said in commentary released with fourth-quarter earnings results after the close of markets on Monday, Jan. 24.

Strong order backlogs at SDI’s structural steel and rail operations as well as its downstream fabrication operations indicate that nonresidential construction – the largest domestic steel consuming sector – will be strong through most of 2022, he said.

And the automotive sector should also remain on firm footing this year as it catches up with demand it could not meet last year because of supply-chain problems, Millett added.

All told, SDI posted record net income of $1.09 billion in the fourth quarter of 2021, nearly six times higher than net income $187.8 million in the fourth quarter of 2020 on revenue that doubled to $5.31 billion in the same comparison.

The steelmaker in addition posted record annual net income of $3.21 billion in 2021, a nearly sixfold increase from $550.8 million in 2020 on sales that rose 92% to $18.4 billion.

Average steel selling prices were $1,662 per ton ($83.1 per cwt) in the fourth quarter 2021, more than double $814 per ton in the fourth quarter of 2020 despite shipments slipping modestly to 2.28 million tons in the fourth quarter of last year versus 2.30 million tons in the fourth quarter of 2020.

Average steel selling prices for full-year 2021 were $1,381 per ton, up 79% from $770 per ton in 2020. 2021 annual shipments were 11.2 million, up 4.7% from 10.7 million in 2020.

SDI does not break out selling prices for specific steel products. But SMU pricing data indicates that first-quarter pricing will be significantly below fourth-quarter levels.

One example: SMU’s hot-rolled coil price stood at $1,425 per ton ($71.25 per cwt) when this article was filed. That’s down 13.6% from a December average of $1,650 per ton and down 24.7% from a fourth-quarter average of $1,794 per ton.

On the operations side, SDI confirmed that it continues to ramp up the electric-arc furnace (EAF) at its new flat-rolled steel mill in Sinton, Texas.

“We had planned to be further along with commissioning the hot side of the steel mill, but supply-chain and COVID challenges delayed the project by several weeks,” Millett said.

Millett last week told SMU that Sinton’s hot strip mill had been commissioned using purchased slabs.

“The team has done a great job with commissioning and operating other aspects of the steel mill, including the rolling mill and two value-added finishing lines, ahead of the melting and casting operations in preparation of full operations commencing before the end of February 2022,” he said.

SDI expects the new mill – which has capacity of 3 million tons per year once fully ramped up – to ship 2 million tons in 2022.

By Michael Cowden, Michael@SteelMarketUpdate.com