Steel Dynamics, Inc. (NASDAQ: STLD) stock fell over 2% on 20th April, 2021 (as of 12:56:40 UTC-4 · USD ; Source: Google finance) after the company posted lower than expected results for the first quarter of FY 21.
During the first quarter, the steel demand was strong and product pricing gained momentum across the entire steel platform. Higher flat roll steel selling values had led to record quarterly earnings, as demand strength and historically low customer inventories throughout the supply chain supported prices.
Domestic steel consumption remained solid from the automotive, construction and industrial sectors, and energy has shown some signs of rebounding. Further, in the first quarter the operating income from the steel operations was a record $641 million and the metals recycling operations had nearly doubled their earnings sequentially, on the back of improved domestic steel mill utilization increased ferrous scrap demand. The steel fabrication operations has also delivered solid performance, achieving record quarterly shipments and ending March with a record order backlog that is more than 50 percent higher than the previous high point.
The first quarter 2021 average external product selling price for the company’s steel operations grew by $227 sequentially to $1,041 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills rose $93 sequentially to $372 per ton. The Ferrous prime scrap pricing indices rose by approximately $170 per gross ton during the first quarter.
Meanwhile, the company is planning to add four additional value-added flat roll steel coating lines comprised of two paint lines and two galvanizing lines with Galvalume coating capability. The sites for these lines have not been determined yet but two lines comprised of one paint line and one galvanizing line will be located in the Southern U.S., to provide Sinton with the same diversification and higher-margin product capabilities as our Butler and Columbus Flat Roll Steel divisions. The projected investment for these two lines is $225 million, with a combined annual coating capacity of 540,000 tons. The other two lines will have the same annual coating capacity with an projected investment between $175 million and $200 million.