Steel Dynamics, Inc. announced fourth quarter and annual 2021 financial results Monday, reporting record fourth quarter 2021 net sales of $5.3 billion and net income of $1.1 billion. Comparatively, the company's sequential third quarter 2021 net income was $1.0 billion on net sales of $5.1 billion. Prior year fourth quarter net income was $196.9 million on net sales of $2.6 billion.
Annual 2021 net income was a record $3.2 billion, with record net sales of $18.4 billion, as compared to net income of $551 million with net sales of $9.6 billion in 2020.
Mark D. Millett, Chairman and Chief Executive Officer, commented, "Domestic steel demand was strong throughout the year supported most significantly by the construction, automotive, and industrial sectors. Customer steel inventories also remained historically low, as steel supply was not sufficient to meet robust demand requirements during much of the year. This strong market environment drove significantly higher realized steel selling values, resulting in meaningful steel metal spread expansion."
In a press release, Steel Dynamics said fourth quarter 2021 operating income for the company's steel operations was a record $1.4 billion, aligned with sequential third quarter results, due to meaningful metal spread expansion across the entire steel platform. Coupled with flat scrap input costs, record flat roll and strong long product steel selling values more than offset seasonally lower steel shipments. The fourth quarter 2021 average external product selling price for the company's steel operations increased $112 sequentially to $1,662 per ton. The average ferrous scrap cost per ton melted at the company's steel mills remained static at $490 per ton.
Fourth quarter operating income from the company's metals recycling operations remained strong at $44 million based on improved metal margins offsetting lower ferrous shipments. Many domestic steel mills had planned maintenance outages throughout the fourth quarter 2021, which lowered ferrous scrap demand. Ferrous scrap prices moderated in September and October, recovering to an extent in the later half of the fourth quarter resulting in modestly lower average realized selling values.
The company's steel fabrication operations reported record operating income of $238 million in the fourth quarter 2021, more than 2½ times higher than sequential third quarter results. Supported by strong shipments, earnings meaningfully increased as realized pricing increased $986 per ton, more than offsetting the continued increase in average steel input costs. Sustained strong demand for steel joist and deck has resulted in a record backlog for the company's steel fabrication platform in terms of both forward-product pricing and volume. The company anticipates this momentum to continue through 2022 based on these dynamics.
As for an outlook, Millet said, "We believe the market dynamics are in place for domestic steel consumption to further increase in 2022 when compared to 2021. Based on domestic steel demand fundamentals and customer confidence, we believe North American steel consumption will experience steady growth, supported by the construction, automotive, and industrial sectors. Our Structural and Rail Division and steel fabrication operations provide us with more specific insight into the non-residential construction sector, which is the single largest domestic steel consuming sector. Based on our record steel fabrication order backlog extending through most of 2022, combined with the continued strength of order activity and broad customer optimism, we believe construction will remain strong in the coming year. In addition, we believe the more severe supply chain challenges within the North American automotive sector will abate during 2022, supporting stronger production for vehicles that are in high demand and short supply.”