Fort Wayne, Indiana-based Steel Dynamics Inc. reported a decline in earnings in Q3 2011 compared to the previous quarter on Monday, largely as a result of the company's flat rolled sector. Keith Busse, Chairman and CEO of Steel Dynamics said, "Quarter over quarter operating income was significantly impacted by decreased flat rolled earnings. Despite relatively unchanged volumes, earnings from our flat rolled operations declined 60 percent in Q3 as declines in pricing were matched with increased raw material costs, resulting in significant margin compression."
Average-per-ton selling prices for flat-rolled steel fell $95/net ton in Q3, although SDI indicated that order activity remains "fairly consistent" and the company believes that the pricing trend has reached "a current cycle bottom." Busse added that the flats mill operated at 93 percent of production capacity in Q3.
On the other hand, Steel Dynamics' Bar Products Division was strong in Q3, and "the mill's production of 167,000 tons in the third quarter was at a rate exceeding its theoretical annual capacity of 625,000 tons." The structural and rail division operated at a 50 percent capacity utilization rate, its highest production rate since the recession lows of 2009.
Overall Q3 net income for Steel Dynamics was $43 million, compared to Q2 net income of $99 million.