SDI Expects Lower Q3 Earnings, Continues to Be Impacted by Sinton Ramp-Up

Steel Dynamics Inc. expects its third quarter earnings to be down from the second quarter as the Fort Wayne, Ind.-based steelmaker is seeing lower flat rolled earnings and pricing, as well as continued impacts from the start-up of its new sheet mill in Sinton, Texas.

SDI’s earnings guidance is in the range of $4.93–4.97 per diluted share for Q3. This includes cost impacts of $0.40 per diluted share related to the Sinton mill. The Q3 guidance is down from the $6.44 per diluted share achieved in Q2 (when costs associated with Sinton’s start-up were $0.29 per diluted share), but up slightly from the $4.85 per diluted share seen in Q3 2021 earnings.

Profitability in the company’s steel operations is anticipated to be historically strong for Q3, SDI noted, but will be down noticeably sequentially “due to lower earnings from the company’s flat-rolled steel operations, as lower average flat-rolled steel pricing is expected to more than offset lower raw material costs and higher shipments.”

Impacts of high-cost steel substrate Q3 inventory at the Texas Flat Roll Steel Division should be alleviated before year’s end, SDI commented.

Lower Q3 pricing and volumes in ferrous and nonferrous scrap will result in lower earnings within the company’s metals recycling operations. At the same time, the steel fabrication segment’s Q3 earnings will be higher than its record Q2 results due to strong volumes and expanding margins. A strong non-residential construction market will result in continuing strength in the segment’s order backlog and this is expected to continue well into 2023.

By Laura Miller, Laura@SteelMarketUpdate.com