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

Steel Dynamics’ (SDI) third-quarter 2020 steel production and shipments declined 1-2pc but the firm’s revenue loss was greater due to metal spread compression on lower selling prices in the company’s flat-rolled division. 


SDI continues with plans for the construction of its Texas mini mill with an expected project cost of $1.9bn, with plans to launch operations in mid-year 2021. The acquisition of Zimmer metals recycling in Mexico is important to the raw materials strategy of the new mill. 


Mark D. Millett, president and chief executive officer, said the company is experiencing a solid recovery in domestic steel demand with the automotive sector demonstrating the strongest improvement, and the construction sector continues strong, but energy remains the weakest end market. Millett added that steel service center inventories were extremely low and remain low compared to historical norms which are encouraging fulfillment orders in Q4. 


Steel Dynamics’ (SDI) sales declined by 7.8pc to $2.3bn in Q3 from a year ago and fell by 13.7pc in the first nine-months against the prior year period. Gross profit in Q3 slipped by 18.6pc to 292.8mn while it decreased by 18.3pc to 992.5mn for the first nine months of the year from a year ago. EBITDA declined by 33.7pc to 133.4mn in Q3 2020 as the nine-months figure trended close at 33.1pc to 725.3mn. 


Of the $2.3bn in Q3 sales, $1.7bn or 72.8pc was steel while the remainder was comprised of fabrication sales of $241.5mn or 10.4pc, metals recycling $272.5mn or 11.7pc, and the remainder other sales revenue of 120.3mn or 5.2pc of total sales. Compared to the same quarter last year, steel sales in Q3 fell from 76.1pc to 72.8pc of total sales.


Metals Recycling sales decreased by 3pc to $272.5mn in Q3 but declined more substantially by 24.5pc to $720.9mn in the first nine-months from the prior periods in 2019.


In Q3, nonferrous shipments increased by 4pc to 267.3mn lb compared to 257.1mn lb in Q2 2019. Ferrous shipments increased by 7.4pc to 1.3mn gt in Q3 2020 against 1.2mn in the same quarter a year ago. Shipments increased in a period of declining prices. External ferrous shipments decreased by 6.7pc to 369,576gt in Q3 compared to the same period in 2019.


For the first nine months, nonferrous shipments dropped by 13.4pc to 706mn lb and ferrous shipments slipped by 7.9pc to 3.3mn gt compared to the same period in 2019. External ferrous dropped 20.2 pc to 961,197gt.


In Q3, total steel shipments decreased by 1.1pc to 2.7mn nt, external shipments in tons decreased by 2.2pc to 2.3mn nt, and steel mill production slipped by 2.1pc to 2.3mn nt, all changes compared to the same quarter in 2019. For the nine-month period, total steel shipments declined by 1.4pc to 8mn nt as external steel shipments declined by 2pc to 7mn nt, and steel mill production fell by 2.7pc to 7mn nt. 


The average external sales price of steel fell by 9.3pc to $734/nt in Q3 compared to the same quarter a year ago but dropped by 12.5pc to $755/nt for the first nine-months of 2020 also against the same period in 2019.


The average ferrous cost dropped by 5.8pc to $259/nt in Q3 against the same quarter in 2019 as prices fell by 14.6pc to $264/nt for the first nine-months of 2020 from the same period a year ago. 

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