Dive Brief:
- Fort Wayne, IN-based steelmaker and metals recycler Steel Dynamics Inc. (SDI), had fourth quarter earnings of three to seven cents per share, compared to 25 cents per share in the third quarter of 2015, and 40 cents per share in the last quarter of 2014. However, the company projects to end this year with record high liquidity — generating over $200 million for the last quarter.
- Highlighted fourth quarter projections are markedly lower profitability from steel, with the largest decline in commodity-grade hot roll products. A drop in overall average steel product pricing, a loss in metals recycling, and better numbers for the automotive and construction markets will also likely be trends.
- With $8.8 billion in sales in 2014, the 7,500-employee company owns six steel mills, eight steel coating facilities, an iron production facility, about 80 metals recycling sites, and eight steel fabrication plants.
Dive Insight:
It’s a cyclical market, as one economic dynamic affects another. Steel shipments have been down because of high imports, customer destocking, and seasonally lower demand. In turn, steel product pricing is expected to continue to drop significantly. For SDI this will offset savings from lower ferrous scrap costs, the company explained.
Although the scrap metal market carries unpredictability, some industry experts say they are not expecting an upturn in the scrap metal market until 2017.
Speaking of its metals recycling business, including OmniSource Corporation, SDI said, "financial results are expected to decline to a loss position ... based on lower shipments and metal spread compression."
The company statement went on to say, "Lower domestic steel mill utilization is expected to result in significantly weaker ferrous scrap shipments and has decreased ferrous scrap selling values approximately $65 to $70 per ton from the end of Sept. 2015 to the end of Nov. 2015."
