Steel Dynamics, Inc. today provided fourth quarter 2020 earnings guidance in the range of $0.72 to $0.76 per diluted share. Comparatively, the company's sequential third quarter 2020 earnings were $0.47 per diluted share, and prior year fourth quarter earnings were $0.56 per diluted share.
In a press release, the company said fourth quarter 2020 earnings from the company's steel operations are expected to be meaningfully higher than sequential third quarter results, driven by flat roll metal spread expansion and steady total steel shipments.
Average realized quarterly flat roll steel product pricing is expected to increase significantly during the quarter, more than offsetting increased scrap costs. The company said domestic steel demand remains strong, with the automotive and construction sectors leading the momentum. Strong demand coupled with historically low steel inventories throughout the supply chain is supporting higher steel selling values and order entry activity, SDI said.
The company also noted that as domestic steel production further increased in the fourth quarter, ferrous scrap demand also strengthened. Fourth quarter earnings from the company's metals recycling operations are also expected to be higher than sequential third quarter results, based on significantly higher metal margins as average quarterly ferrous scrap prices increased and volumes expanded.
As construction continues to be resilient, SDI said the customer order backlog for the company's steel fabrication platform is at a record high, and customers are optimistic concerning non-residential construction projects, as evidenced through sustained order activity. However, fourth quarter 2020 earnings from the company's steel fabrication operations are expected to be lower than the record results achieved in the sequential third quarter, due to lower seasonal shipments and metal spread compression, as average industry selling values declined and steel input costs increased, SDI said.