Steel Dynamics Inc. (SDI), based in Fort Wayne, Indiana, reported net income of $914 million for the third quarter of 2022, or $5.03 per diluted share. That compares to $6.44 per share in the prior quarter, but is up from $4.85 per share a year ago.
“The team delivered a strong performance during the quarter,” said Mark D. Millett, Chairman, President and CEO of SDI. “These results continue to show the power of our highly diversified, value-added circular manufacturing model – as the strength of our steel manufacturing business significantly offsets lower earnings from our flat-rolled steel business, with a decline in realized flat-rolled steel sales values by nearly 15% in the quarter.
Despite broader economic concerns centering on inflation and higher interest rates, Millett says demand for SDI’s steel products remains strong. “We achieved record quarterly steel shipments of 3.2 million tonnes, thanks to stable steel demand, driven by the construction industry and supplemented by the automotive, industrial and energy.”
SDI reports that third-quarter 2022 operating income from its metal recycling business “decreased significantly sequentially to $10 million, due to sequentially lower ferrous and non-ferrous scrap prices and lower volume “.
The scrap-fueled electric arc furnace (EAF) steelmaker says its “average realized price of ferrous scrap” fell nearly 30% in the third quarter. SDI says it “believes scrap prices have stabilized for the remainder of the year.”
SDI cites “metal spread compression” for third-quarter 2022 operating profit at its steel operations that fell more than 50% from a year ago to $658 million, “despite a record volume”.
According to Millett, “Scrap metal price indices declined monthly beginning in May and continued through October 2022, resulting in a significant decline in revenue from our metal recycling operations. In contrast, our steel fabrication business had another record quarter, with a profit of $677 million, based on higher realized sales values, lower steel input costs and a stable construction demand environment and continued.
Looking ahead, the CEO comments: “Customer order entry activity continues to be healthy across our businesses, with moderate seasonal volume expectations for our steel and metals recycling operations in the months ahead. coming. Despite lower flat-rolled steel prices, our order activity and order books remain strong. We believe that steel consumption in North America will remain stable and that demand for low carbon steel products made in the United States, coupled with lower imports, will support steel prices.
Regarding SDI’s newest plant, Millet says, “Operations continue to ramp up at our Sinton flat steel division. The surface quality of the product is excellent, and the grade development and dimensional tolerances exceeded our expectations. Sinton’s team operated at a 65% rate in October and achieved rates of over 80% for several one-day periods, confirming our expectation to achieve an operating rate of at least 80 % for the year 2023.”
Millett also provided an update on SDI’s aluminum journey, commenting, “We are making rapid progress on our aluminum flat-rolled products facility and we are incredibly excited about this significant growth opportunity, which is aligned with our existing commercial and operational expertise.
He continues, “We have intentionally grown with the needs of our customers, providing efficient and sustainable supply chain solutions for the highest quality products. So far this has been mainly achieved in the carbon steel industry – however a significant number of our flat rolled carbon steel customers are also consumers and processors of flat rolled aluminum products. We are excited to further diversify our end markets with plans to supply high-recycled aluminum flat-rolled products to the sustainable countercyclical beverage can industry, in addition to the automotive and industrial sectors.
Millett concludes: “We believe there are strong drivers for our continued growth, and we remain in a position of strength. Our planned investments in a new state-of-the-art low-carbon aluminum flat rolling mill and associated recycled aluminum slab centers continue our strategic growth, align with our core manufacturing platforms of steel and recycling, benefit many of our existing customers and anticipate the creation of future value. We are well positioned for long-term sustainable growth.