Steel Mills
SDI Posts Record Q2 Profits Despite Lower Flat-Rolled Steel Prices
Written by Michael Cowden
July 20, 2022
Steel Dynamics Inc. (SDI) posted record second quarter profits despite a modest margin squeeze stemming from lower steel prices and higher scrap costs.
The Fort Wayne, Ind.-based steelmaker also remains bullish about the second half of the year despite concerns about demand in some corners of the market.
“Customer order entry activity continues to be healthy across all of our businesses, conflicting with the more pessimistic emotion in the marketplace,” SDI chairman, president and CEO Mark Millet said in commentary released with second quarter earnings data on Wednesday, July 20.
“Despite softening flat-roll steel pricing, our steel order activity remains solid from the automotive, construction, and industrial sectors, with energy continuing to improve,” he said.
SMU’s hot-rolled coil price stands at $875 per ton ($43.75 per cwt), the lowest level since December 2020 and down 41% from a post-Ukraine war peak of $1,480 per ton in mid/late April.
By the Numbers
All told, SDI recorded net income of $1.21 billion in the second quarter of this year, up 72% from $702.3 million in the same quarter last year on revenue that increased 39% to $6.21 billion over the same period.
Operating income from SDI’s steel division – its largest business unit – was $1.11 billion in Q2’22, up a comparatively modest 9% from $1.02 billion in Q2’21. One reason for that: Average steel selling prices were $1,539 per ton in the second quarter, down $22 per ton from the first quarter. Average ferrous costs, meanwhile, were $538 per ton, up $64 per ton from the prior quarter, the company said.
But SDI made up for any margin pressure with increased shipments. External shipments weighed in at 3.11 million tons in the second quarter of 2022, up nearly 8% from 2.89 million tons in year-ago quarter.
Lower growth rates in steel were also more than offset by a stellar showing from the company’s fabrication segment, which recorded operating income of $599.2 million in the second quarter of this year, up 21-fold from $28.45 million in the year-ago quarter. Strong non-residential construction demand has led to a near-record backlog and higher forward pricing for the fabrication division. And that momentum is expected to continue into 2023, SDI said.
Operations Update
SDI said it reached a run rate of 80% at the hot mill at its electric arc furnace sheet mill in Sinton, Texas in the second quarter.
But Sinton experienced setbacks this month because of unexpected power and equipment problems. Those have resulted in less operating time in July. “The team expects to realize meaningful improvement for the remainder of the year,” Millett said.
He also reiterated his excitement about the company’s $2.2 billion expansion into finished aluminum products with a planned new aluminum rolling mill slated for the southeastern US.
By Michael Cowden, Michael@SteelMarketUpdate.com
Michael Cowden
Read more from Michael CowdenLatest in Steel Mills
SDI presses on with steel, aluminum investments
Steel Dynamics Inc. remains optimistic about its prospects as it ramps up flat-rolled steel operations and prepares for the production of aluminum products next year. Executives from the Fort Wayne, Ind.-based steelmaker provided an update on the company’s operations on a conference call on Thursday held to discuss SDI’s third-quarter earnings results.
CMC earnings slide, but still near top mark
CMC Fourth quarter ended Aug. 31 2024 2023 Change Net sales $1,996.1 $2,209.2 -9.6% Net income (loss) $103.9 $184.2 -43.6% Per diluted share $0.90 $1.56 -42.3% Full year ended Aug. 31 Net sales $7,925.9 $8,799.5 -9.9% Net income (loss) $485.5 $859.7 -43.5% Per diluted share $4.14 $7.25 -42.9% (in millions of dollars except per share) […]
SDI posts lower Q3 profit, sees better times in ’25
Steel Dynamics Inc. (SDI) reported a drop in third-quarter profits driven largely by lower flat-rolled steel prices. The Fort Wayne, Ind.-based electric arc furnace (EAF) steelmaker also saw scrap prices slip. That happened because of softer demand from domestic mills taking planned maintenance outages.
Cliffs hosts fireside chat on industry, union, government collaboration
Cleveland-Cliffs’s Chairman, President, and CEO Lourenco Goncalves hosted a fireside chat with US Trade Representative Katherine Tai and Acting Secretary of Labor Julie Su on Friday at the company’s plate mill in Coatesville, Pa.
Nippon agrees to sell Calvert stake, if USS deal closes
ArcelorMittal is set to take full ownership of AM/NS Calvert if Nippon Steel finalizes its pending acquisition of U.S. Steel.