Steel Dynamics, Inc. announced third quarter 2023 net sales of $4.6 billion and net income of $577 million. Comparatively, the company's sequential second quarter 2023 net income was $812 million, and prior year third quarter net income was $914 million.
In a press release, the company said the sequential decline in earnings was the result of lower realized flat rolled steel and steel fabrication pricing.
“Customer order activity and steel demand were steady during the third quarter, with our steel shipments remaining consistent excluding the lost volume from Sinton's unplanned July outage of approximately 90,000 tons,” said Mark D. Millett, Chairman and Chief Executive Officer. “The caster shear issues were successfully addressed, and we expect the team to reach about 65 to 70 percent production utilization before the end of the year. Continuing low customer steel inventories combined with steady order activity, stabilized flat rolled steel pricing in mid-September. Recently, there have also been additional price increases related to customer concerns over potential lack of flat rolled steel availability in the fourth quarter, as backlogs have extended."
SDI said third quarter 2023 operating income for the company's steel operations was $474 million, representing a 33 percent sequential decline based on metal spread compression within the company's flat rolled steel operations as steel prices decreased more than scrap costs. The third quarter 2023 average external product selling price for the company's steel operations decreased $66 per ton sequentially to $1,191 per ton. The average ferrous scrap cost per ton melted at the company's steel mills decreased $39 per ton sequentially to $405 per ton.
Third quarter operating income from the company's metals recycling operations decreased 54 percent to $19 million, as ferrous scrap shipments declined combined with metal spread compression related to lower realized ferrous and nonferrous scrap pricing. Domestic ferrous scrap demand was impacted due to numerous steel mill maintenance outages during the quarter, SDI said.
SDI said its steel fabrication operations achieved historically strong operating income of $330 million in the third quarter 2023, but below second quarter results, based on lower shipments and metal spread compression as lower realized selling values were combined with steady steel substrate costs. The order backlog extends through the first quarter 2024, with strong forward-pricing, SDI said. In addition, the company believes that the continued onshoring of manufacturing, coupled with the robust US infrastructure and Inflation Reduction Act programs, combined with industrial construction, supports strong demand in the coming years.
As for an outlook, Millet said, “Based on domestic steel fundamentals, we are constructive regarding North American steel market dynamics.”
Millet added, “customer order entry activity continues to be solid across our steel operations, as demand continues to be steady and customer inventories remain at low historical levels. We believe North American steel consumption will increase in the coming years, and that demand for lower-carbon emission, US produced steel products coupled with lower imports will support steel pricing.”