Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

US-based Steel Dynamic Inc (SDI) expects its Q4 2020 earnings to grow significantly over the prior quarter and the prior year, supported by better steel prices, especially for its flat-rolled products (FRSP). 


SDI expects its per-share earnings to rise to 72-76¢ from 47¢ per share in Q3 2020 and 56¢ a share in Q4 2019. The company attributed the rise in earnings to better spreads for FRSP and strong total steel shipments in the quarter. SDI noted that better prices for FRSP have offset higher input costs from ferrous scrap toward the end of this year. 


According to the company’s Q4 earnings outlook, strong demand for fabricated steel from the domestic construction industry, paired with “historically low” steel inventories had also led to better price realizations.


While prices for ferrous scrap inputs rose in the quarter, the company expects its recycling operations to perform better in Q4, owing to improved processing volumes and the aforementioned higher downstream steel prices. 


The company will account for $15mn in capital expenditure towards the construction of its Sinton flat-rolled steel mil in Texas during the fourth quarter, as well as $10mn in refinancing, both of which will impact the final earnings in Q4 2020. 

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