Steel Dynamics, Inc. reported record second quarter 2021 net sales of $4.5 billion and net income of $702 million. Comparatively, prior year second quarter net sales were $2.1 billion, with net income of $75 million.
Second quarter 2021 operating income for the company's steel operations was a record $1.0 billion, or 59 percent higher than sequential first quarter results, due to significant metal spread expansion and record quarterly steel shipments, the company said in a press release. Record flat roll and strong long product steel realized selling values, more than offset higher scrap input costs. The second quarter 2021 average external product selling price for the company's steel operations increased $251 sequentially to $1,292 per ton. The average ferrous scrap cost per ton melted at the company's steel mills increased $67 sequentially to $439 per ton.
Domestic steel production continued to increase in the quarter maintaining strong ferrous scrap demand and pricing, SDI said. Ferrous prime scrap pricing indices increased about $60 to $70 per gross ton during the second quarter. As a result, second quarter 2021 operating income from the company's metals recycling operations remained strong at $51 million.
The company's steel fabrication operations reported operating income of $28 million in the second quarter 2021, almost tripling the sequential first quarter results. Supported by record quarterly shipments, earnings significantly improved as realized pricing increased almost $350 per ton, more than offsetting higher average steel input costs. Steel joist and deck product pricing has strengthened significantly to record levels, the company said, due to the strong demand environment and higher steel input costs. SDI said order activity remains extremely strong, and customers continue to be optimistic concerning projects. The company's steel fabrication order backlog is at a record level at the end of June.
“During the second quarter, steel demand remained robust as shipments and product pricing continued their positive momentum across our entire steel platform,” said Mark D. Millett, Chairman and Chief Executive Officer. “Higher steel selling values drove significant metal spread expansion across the entire platform and were most prominent within the flat roll steel operations, as continued demand strength and historically low customer inventories persisted throughout the supply chain and supported prices. Domestic steel consumption was strong from the automotive, construction, and industrial sectors, while the energy sector continued to show signs of rebounding.”
As for an outlook, Millett said the company remains confident that “macroeconomic and market conditions are in place to support strong domestic steel demand in 2021 and beyond.”
“We continue to see strong steel demand coupled with extremely low customer steel inventories throughout the supply chain,” Millett said in a press release. “The automotive sector continues to be strong, despite the electronic chip shortage, and other sectors such as construction, equipment and transportation remain solid. Order entry activity continues to be robust across our businesses, and when coupled with low inventory, supports strong steel selling values. We believe this momentum will continue throughout the year and that our third quarter 2021 earnings could represent another record performance. Based on solid domestic steel fundamentals and customer confidence, we continue to be positive regarding North American steel market dynamics. This constructive environment coupled with our strategic growth initiatives provide firm drivers for our further growth in the coming years.”