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EAF steelmakers ratchet up profit forecasts

Nucor, Steel Dynamics make earnings revisions announcements on the same day.

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June 17, 2021

Two of the largest electric arc furnace (EAF) steelmakers have alerted investors they are likely to report greater profitability than they had previously forecast for the financial quarter ending June 30, 2021.

Charlotte, North Carolina-based Nucor Corp. and Fort Wayne, Indiana-based Steel Dynamics Inc. (SDI) both alerted investors June 16 using the words “record earnings” to refer to the current financial quarter.

Each company also owns a major scrap processing business unit (David J. Joseph Co. in the case of Nucor; OmniSource Corp. is owned by SDI). The two announcements come just two days after Australia-based global scrap processor Sims Ltd. also alerted investors about a boost in profits.

“All three operating segments are continuing to generate robust profitability as overall strong demand is supporting higher average selling prices,” Nucor says in its earnings guidance announcement. The company says its finished steel segments are particularly profitable, while earnings in its raw materials operating unit “are expected to decrease in the second quarter of 2021.”

The EAF steelmaker adds, “Nucor has returned more than $1.1 billion to stockholders in the form of share repurchases and dividend payments year to date.”

SDI states, “Second-quarter 2021 profitability from the company’s steel operations is expected to be significantly higher than first-quarter results, setting a new quarterly record, driven by strong underlying steel demand and significant metal spread expansion across the entire platform, but most pronounced within the flat roll steel operations.”

The SDI guidance press release states in part, “Ferrous scrap demand also continued to be strong in the second quarter, as domestic steel production continued to improve. Second-quarter earnings from the company's metals recycling operations are expected to be aligned with strong sequential first-quarter results, based on steady shipments and increased pricing.”

The firm adds, “Domestic steel demand remains strong, with the automotive, construction, and industrial sectors continuing to lead the momentum. Order entry continues to be robust as strong demand, coupled with continuing historically low flat-roll steel inventories underpin elevated steel selling values. The company believes this momentum will continue, resulting in even stronger third-quarter results.”