On Friday, Fort Wayne, Indiana-based steelmaker Steel Dynamics, Inc. provided Q2 2012 earnings guidance in the range of $0.15-$0.20 per diluted share, lower than the $0.20 per diluted share in Q1 and below the $0.43 per diluted share reported in Q2 2011.
Despite relatively stable sheet steel demand, including strength in the automotive, energy, construction equipment and agricultural sectors, Steel Dynamics' softer earnings estimate is primarily the result of decreased sheet steel pricing attributable to supply-side pressures from increased imports and increased domestic steel capacity.
Metals recycling earnings are also expected to be lower due to late Q2 pricing and volume pressures attributable to softer export markets and weaker mill buying patterns, resulting in an oversupplied environment. Due to inventory overhang, however, the benefits from decreased scrap pricing on the company's steel operations will not be fully reflected until Q3.