Steel Dynamics, Inc. today provided third quarter 2020 earnings guidance in the range of $0.42 to $0.46 per diluted share. Comparatively, the company's sequential second quarter 2020 earnings were $0.36 per diluted share.
In a press release, the company said third quarter 2020 earnings from the company's steel operations are expected to be lower than sequential second quarter results, due to metal spread compression more than offsetting increased shipments driven by improved automotive and strong construction demand.
Average realized quarterly flat roll steel product pricing is expected to decrease during the quarter based in part on lagging price-indexed contracts, offsetting the benefit of lower average scrap costs, the company said. However, flat roll steel pricing has stabilized and improved during the second half of the third quarter, supported by customer demand and raw material pricing, SDI said.
As domestic steel production improved in the third quarter from the trough experienced in the sequential second quarter, ferrous scrap demand also strengthened, SDI said in a statement. Based on significantly higher scrap shipments, third quarter earnings from the company’s metals recycling operations are expected to be meaningfully better than sequential second quarter results.
Construction continues to show its resiliency, the company said, adding that the customer order backlog for its steel fabrication platform remains strong, and customers are optimistic concerning non-residential construction projects. Third quarter 2020 earnings from the company's steel fabrication operations are expected to be at, or near, record results, based on anticipated record shipments and margin expansion, as product pricing is expected to improve while steel input costs decrease.