
Fort Wayne, Indiana-based Steel Dynamics Inc. (SDI) has provided guidance to investors indicating its first quarter 2021 earnings, which it is forecasting as “in the range of $1.88 to $1.92 per diluted share,” could “represent a record earnings quarter for the company.”
The company, which melts ferrous scrap at several electric arc furnace (EAF) steel mills and owns multilocation scrap processing and trading firm OmniSource, says the results being portrayed exclude the “impact from costs associated with the construction of the company’s Sinton, Texas, flat-roll steel mill investment of $18 million, or 6 cents per diluted share.”
The forecasted first quarter 2021 results represent about a 110 percent boost from fourth-quarter 2020 earnings of 89 cents per diluted share.
The company states, “First-quarter 2021 profitability from the company’s steel operations is expected to be significantly higher than sequential fourth-quarter results, driven by flat-roll metal spread expansion as strong demand continues to support flat-roll steel prices.”
The firm has calculated that during the quarter, the rising steel prices are “more than offsetting higher scrap costs.”
In terms of volume, SDI says first quarter 2021 steel shipments are “expected to increase sequentially across the company’s portfolio,” adding that “domestic steel demand remains strong, with the automotive and construction sectors leading the momentum.”
Regarding its OmniSource operations, SDI writes, “Ferrous scrap demand also continued to be strong in the first quarter, as domestic steel production continues its momentum. First-quarter earnings from the company’s metals recycling operations are also expected to be meaningfully higher than sequential fourth-quarter results, based on increased volume and improved metal margins, as average quarterly raw material prices appreciated considerably during the quarter.”
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