Steel Dynamics Inc. expects second quarter earnings from the company's steel operations to be significantly lower sequentially from the first quarter due to lower shipments and selling prices as a result of the temporary closures of numerous steel-consuming businesses due to the coronavirus pandemic, the US-based steelmaker said late June 18.
Automotive producers and the related supply chain paused operations in March as a result of the pandemic and have just recently begun restarting production, SDI said. Construction-related steel demand, however was steadier than industrial manufacturing throughout Q2, the company added.
SDI's US mills shipped a total of 2.85 million st in Q1.
SDI's raw materials division also is expected to record an operating loss in Q2 as scrap collection declined and significantly lower domestic steel production resulted in weak scrap demand, it said.
"As states begin to reopen and steel consuming businesses resume operations, the company anticipates steel and recycled scrap volumes will improve," SDI said. "The company believes trade protections that are already in place will continue to limit the amount of unfairly traded steel products coming into the United States, providing additional support for domestic steel mill utilization."
SDI expects its Q2 earnings to be in the range of 29 cents to 33 cents per diluted share. This compares with with net earnings of $194.3 million, or 87 cents per diluted share, on sales of $2.77 billion in Q2 2019.
The most recent quarter includes costs of approximately $25 million related to the company's June refinancing activities and approximately $10 million associated with the construction of the company's flat-rolled steel mill in Sinton, Texas.
