Steel Dynamics Inc (NASDAQ:STLD) stock rose 2.21% (As on July 18, 11:24:52 AM UTC-4, Source: Google Finance) after the company reported a drop of 47% in second-quarter profit, amid declining domestic steel prices. Oversupply in the market, stemming from both domestic production and imports, has led steel distributors to refrain from purchases beyond immediate inventory needs. The steelmaker and peers Nucor and U.S. Steel, a month earlier, had warned of a fall in quarterly profits on account of the deteriorating steel prices. With prices anticipated to decline further through summer, when steel consumption traditionally wanes, analysts expect steelmakers to curb supply until domestic demand rebounds from inflationary pressures. The company’s net profit for the quarter ended June 30 was $427 million compared with $812 million a year earlier.
Moreover, second quarter 2024 operating income for the company’s steel operations was $442 million, lower than sequential results, as realized selling values declined more than scrap costs in the quarter. The second quarter 2024 average external product selling price for the company’s steel operations decreased $63 per ton sequentially to $1,138 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills decreased $29 sequentially to $388 per ton. The company’s Sinton Texas Flat Roll Steel Mill team completed needed changes to gain full access to its melting capacity this week. The company believes Sinton’s production utilization rate will increase from 60 percent for the first half of the year to approximately 75 percent for the second half of 2024, with full availability in 2025. The company’s steel fabrication operations achieved strong operating income of $181 million in the second quarter 2024 aligned with sequential first quarter results of $178 million, based on increased volume.
STLD in the second quarter of FY 24 has reported the adjusted earnings per share of $2.72, beating the analysts’ estimates for the adjusted earnings per share of $2.67. The company had reported the adjusted revenue of $4.63 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $4.45 billion.
In addition, the company continues to ramp up the four new value-added flat rolled steel coating lines that began operating earlier this year. The company will be benefitting from this additional 1.1 million tons of value-added steel products in the second half of this year and fully in 2025.