Steel Dynamics, Inc. announced first quarter 2021 financial results. The company reported first quarter 2021 net sales of $3.54 billion and net income of $431 million. Comparatively, prior year first quarter net sales were $2.58 billion, with net income of $187 million. The company's sequential fourth quarter 2020 earnings were $188 million on net sales of $2.60 billion.
In a press release, Mark D. Millett, President and Chief Executive Officer, said, "During the first quarter, steel demand remained robust and product pricing gained momentum across our entire steel platform. Higher flat roll steel selling values were the most significant drivers for our record quarterly earnings, as demand strength and historically low customer inventories throughout the supply chain supported prices. Domestic steel consumption remained strong from the automotive, construction and industrial sectors, and energy has shown some signs of rebounding.”
First quarter 2021 operating income for the company's steel operations was a record $641 million, or 115 percent higher than sequential fourth quarter results, due to significant metal spread expansion and near-record steel shipments. Record flat roll and strong long product steel realized selling values, more than offset higher scrap input costs. The first quarter 2021 average external product selling price for the company's steel operations increased $227 sequentially to $1,041 per ton. The average ferrous scrap cost per ton melted at the company's steel mills increased $93 sequentially to $372 per ton.
As domestic steel production continued to rise in the quarter, demand and pricing for recycled scrap significantly improved. Ferrous prime scrap pricing indices increased approximately $170 per gross ton during the first quarter. As a result, first quarter 2021 operating income from the company's metals recycling operations nearly doubled to $54 million, compared to the sequential fourth quarter.
The company's steel fabrication operations reported operating income of $10 million in the first quarter 2021, over 60 percent lower than the sequential fourth quarter results. Notwithstanding achieving record quarterly shipments, earnings declined as significantly higher steel input costs more than offset higher realized selling values, due to the timing of matching a six-month backlog to more current higher-priced steel inputs.
The company said lower earnings are not a reflection of weaker demand, as order activity is extremely strong and customers continue to be optimistic concerning non-residential construction projects. The company's steel fabrication order backlog is at a record level at the end of March, 85 percent higher than its previous peak. Steel joist and deck product pricing has also strengthened significantly to record levels due to the strong demand environment and higher steel input costs.
As for an outlook, Millett said the company is confident that market conditions are in place to benefit the domestic steel industry in 2021 and beyond.
"While global economies are still recovering from the shock of COVID-19, we are seeing strong steel demand coupled with extremely low customer steel inventory throughout the supply chain," Millett said. "The automotive sector has experienced the strongest recovery, despite the electronic chip shortage, and the construction, equipment and transportation sectors are also strong. Our order entry continues to be robust across our businesses, and when coupled with historically low inventories, supports continued strong steel selling values. We believe this momentum will continue throughout the year and that our second quarter 2021 earnings will be even higher than our record first quarter 2021 results. We also believe US trade policies and existing steel trade cases will continue to moderate steel imports. Based on strong domestic steel fundamentals and customer optimism, we continue to be confident regarding North American steel market dynamics. This positive environment coupled with our strategic growth initiatives provide firm drivers for our further growth in the coming years."