STEEL NEWS

Steel Dynamics Profit Surges on Market Rebound

Steelmaker and metals recycler Steel Dynamics Inc.’s profit more than doubled in the most recent period, driven by a market rebound and a drop in Chinese imports. 

Demand from the automotive sector remained strong while construction, historically a barometer for domestic steel demand, continued its gradual recovery. Heavy equipment, agricultural and energy markets remained challenged, the company said. 

Over all, the company reported profit of $157.4 million, or 64 cents a share, from $60.6 million, or 25 cents a share, a year earlier. The results were in line with the company’s downbeat projection.

Revenue, meanwhile, rose 7.7%, to $2.1 billion, slightly above the $2.09 billion expected by analysts surveyed by Thomson Reuters. 

Gross profit margin improved to 19.4% from 11.7% a year earlier. 

Founded in 1993 as a “minimill” to make steel from scrap metal, Fort Wayne, Ind.-based Steel Dynamics has expanded into one of the largest carbon steel producers in the U.S. 

Oversupply—exacerbated by an economic slowdown in China, the world’s largest steel producer and user—battered the sector. But a drop in Chinese exports in the two most recent months along with China’s economic stabilization have helped prices recover. 

The benchmark hot-rolled coil index in the U.S., down about 22% over the past 12 months, rose 5% in the third quarter, according to Platts steel index. 

On Wednesday, Steel Dynamics said the average steel product selling price rose to $740 a ton in the latest period, compared with $640 a ton the previous quarter and $665 a year earlier. The average ferrous scrap cost per ton melted was $251 a ton, compared with $227 in the previous quarter and $252 a year earlier. 

Steel utilization rate was 85%, compared with 95% in the previous quarter and 82% last year. 

Shares closed Wednesday at $25.24, up 41% this year.