Scrap Consumers
September 17, 2024
SDI provides mixed Q3 outlook, steady recycling operations
Written by Stephanie Ritenbaugh
Steel Dynamics expects flat-rolled steel prices to drag down its third quarter, while its recycling operations remain steady.
The Fort Wayne, Indiana-based steelmaker said Q3 2024 profitability will be “meaningfully lower” than Q2 based on lower average realized pricing within the flat rolled operations. About 80% of SDI’s business is contractually based and tied to lagging pricing indices. Flat rolled steel prices stabilized in the third quarter 2024 and have improved.
The company uses about 85% scrap in flat-rolled steel, and more in other products.
Earnings from the company’s metals recycling operations are expected to be comparable to second quarter sequential results, based on steady volumes offsetting marginally lower realized pricing.
SDI is one of the largest metals recyclers in North America and owns several Omni recycling operations.
“Underlying steel demand remains steady,” the company said in its earnings guidance.
Last month, SDI’s president and COO Barry Schneider told attendees at the Steel Market Update Steel Summit that, with a surplus of ferrous scrap supply in the U.S., one key to maintaining costs is watching the price to convert scrap into hot-rolled steel.
“As many of you know, the price of scrap is, in some cases, higher than the price of hot band,” said Schneider.
Q3 2024 earnings from steel fabrication operations are expected to be moderately lower quarter over quarter, based on an anticipated slight decline in average realized pricing. The order backlog is steady, extending into the first quarter 2025 at “attractive pricing levels,” the company said.
Current order activity is steady with expectations for improved volumes in 2025, SDI stated, as interest rates decline and the support from the U.S. infrastructure program and onshoring are expected to positively impact demand for not only steel joist and deck products, but also for flat rolled and long product steels.
