Steel Dynamics expects to double earnings in Q1

Thursday, 18 March 2021 19:18:55 (GMT+3)   |   San Diego

Steel Dynamics, Inc. today provided first quarter 2021 earnings guidance in the range of $1.88 to $1.92 per diluted share. Comparatively, the company's sequential fourth quarter 2020 earnings were $0.89 per diluted share. Prior year first quarter earnings were $0.88 per diluted share.

In a press release, the company said first quarter 2021 profitability from steel operations is expected to be significantly higher than sequential fourth quarter results, driven by flat roll metal spread expansion, as strong demand continues to support flat roll steel prices.  Average realized quarterly flat roll steel product pricing is expected to increase substantially during the quarter more than offsetting higher scrap costs. First quarter 2021 steel shipments are expected to increase sequentially across the company's portfolio.

The company said domestic steel demand remains strong, with the automotive and construction sectors leading the momentum. Order entry continues to be robust as strong demand, coupled with continuing historically low flat roll steel inventories underpin higher steel selling values, and the company said it believes this momentum will continue, resulting in even stronger second quarter 2021 results.      

Ferrous scrap demand also continued to be strong in the first quarter, as domestic steel production continues its momentum, SDI said. First quarter earnings from the company's metals recycling operations are also expected to be meaningfully higher than sequential fourth quarter results, based on increased volume and improved metal margins, as average quarterly raw material prices appreciated considerably during the quarter.

First quarter 2021 earnings from the company's steel fabrication operations are expected to be meaningfully lower sequentially, as higher steel input costs flow through the order backlog. Lower earnings are due to the timing of matching a six-month backlog to more current and higher priced steel inputs, and does not reflect demand dynamics, SDI said. The company expects April 2021 to represent the earnings low point for its steel fabrication platform. First quarter 2021 steel fabrication shipments are likely to reach record levels, as order activity is extremely strong, and customers continue to be optimistic concerning non-residential construction projects, SDI said. Steel joist and deck product pricing has strengthened significantly as a result of strong demand and higher steel costs.

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