SDI Q2 earnings fall, but 'pivot point to the upside' seen for prices

Steel Dynamics Inc.’s (SDI’s) earnings slid in the second quarter, but the company’s top executive thinks steel tags are set to rise.

The Fort Wayne, Ind.-based steelmaker reported net earnings attributable to SDI of $428 million in Q2’24, down 47% from $812 million a year earlier on net sales that slid 9% to $4.63 billion.

SDI shipped 3.2 million tons in the quarter, down nearly 2% from a year earlier.

“Underlying steel demand was stable in the second quarter,” Chairman and CEO Mark Millett said in a statement on Tuesday. “However, earnings declined sequentially due to lower realized selling values in our steel operation, which more than offset our improved earnings from metals recycling and steady earnings from our steel fabrication business.”

Millett said he thinks steel pricing has reached “a pivot point to the upside.”

“We have seen a positive trend in steel order activity in recent weeks, especially for our flat-rolled steel coated products,” he said.

Operations updates

Sinton

SDI said its Sinton, Texas, flat-roll steel mill team completed needed changes to gain full access to its melting capacity this week.

The company forecast that Sinton’s production utilization rate would increase from 60% for 1H’24 to ~75% for 2H’24, with full availability in 2025.

Coating lines

Millett said SDI continues to ramp up its four new flat-rolled steel coating lines that began operating earlier this year. The lines are located at its Heartland flat-rolled processing mill in Terre Haute, Ind., and its Sinton sheet mill.

The company has produced prime-quality galvanized and painted products on all four lines, he said.

The ramp up should give SDI an additional 1.1 million tons of value-added steel products in the second half of this year and into 2025, Millett noted.

Aluminum mill in Columbus, Miss.

Millett said SDI is also progressing on the construction of its aluminum flat-rolled products mill in Columbus, Miss.

“We plan to begin operating the aluminum flat rolled mill mid-2025,” he said.

Outlook

Looking ahead, Millett said the company remains confident that market conditions are in place for domestic steel consumption to be solid in 2H’24.

“Order entry has improved in many of our businesses, and we expect steel pricing to firm,” he said.

Millet also predicted that the automotive, non-residential construction, and industrial sectors would remain steady for the balance of 2024.

The positive outlook is supported by onshoring of manufacturing businesses, US investment in infrastructure, the Inflation Reduction Act, and Department of Energy programs. Those programs have been especially beneficial to SDI’s steel and steel fabrication businesses, he said.