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Steel Dynamics’ earnings are at an all-time high as steel stocks try to recover

After the market closed on Monday, Steel Dynamics (STLD) kicked off a major week of steel earnings. The stock of STLD dipped in late trade after rising on Monday, along with other steel equities that have been hammered hard by the market downturn. While Steel Dynamics stated in its earnings statement that signals point to high demand in 2022, the company didn’t have much to say about the prognosis for steel prices in the future.

Wall Street will be paying particular attention to STLD’s conference call, which will take place on Tuesday at 10 a.m. ET, seeking clues about how steel pricing will shake out in 2022 in the face of increased supply.

In a recent statement, Steel Dynamics, which recently opened a new flat roll steel mill in Sinton, Texas, stated that issues with Covid and supply will prevent the facility from being fully operating until February. The company still expects the Sinton mill to ship 2.0 million tonnes of steel this year, according to the company’s estimates. In comparison, 11.2 million tonnes of STLD are expected to be transported in 2021.

Increased supply is already having a cooling effect on steel prices, which were soaring into the fall. Following President Joe Biden’s agreement with the European Union last year on steel tariffs imposed by the Trump administration, imports will be closely scrutinised in the coming months. Now, a 25 percent duty on steel imports will not be implemented until after the first 3.3 million metric tonnes of steel are imported.

Through the middle of November, the near-month Midwest hot-rolled coil contract reached a high of $1,900 per short tonne and remained at or near that level through the end of August. However, it has now dropped to a level close to $1,400. According to forward prices, it will be worth less than $900 by the summer.

After that, earnings from Nucor (NUE) and U.S. Steel (X) will be released after the market closes on Thursday. All three companies provided updated forecasts in mid-December, with NUE and STLD expecting record profitability in the fourth quarter and U.S. Steel expecting seasonal downturn but remaining optimistic overall.

STLD Earnings

Steel Dynamics’ earnings were predicted to increase to $5.73 per share from 97 cents per share a year ago, according to analyst estimates. According to Zacks Investment Research, revenue increased by 101 percent to $5.22 billion in the first quarter.

Steel Dynamics reported earnings of $5.78 per share on revenue of $5.31 billion, for a total of $5.78 billion.

The company was optimistic about the market for steel. CEO Mark Millett stated, “We anticipate that the market conditions are in place for domestic steel demand to expand even more in 2022 when compared to 2021.” “On the basis of domestic steel demand fundamentals and customer confidence, we think that North American steel consumption will continue to increase at a steady pace, with the construction, automotive, and industrial sectors providing the majority of the growth.”

Millett could not provide data on profitability, sales, or industry pricing for the year 2022.

STLD, Steel Stock Analysis

Overnight, the stock of STLD decreased by 1.2 percent. Stocks recovered from early losses on Monday, finishing the day up 4.3 percent at 54.70 dollars. However, this comes after the stock of Steel Dynamics fell by 15.7 percent last week, shattering through its 200-day moving average in the process.

Since the middle of August, the relative strength line for STLD stock, which shows the stock’s development in comparison to the S&P 500, has been in a definite downtrend. Because of this, it’s unclear whether its failed breakout attempt from a cup with handle base right before Thanksgiving was a fluke.

Nucor and Commercial Metals (CMC) have been the group’s two most successful companies. IBD has assigned NUE stock a Relative Strength Rating of 91, indicating that it has outperformed 91 percent of all stocks over the course of the past year. But while NUE shares fell below their 200-day moving average last week, they rose 2.4 percent on Monday morning. The stock of United States Steel recovered to gain 0.9 percent.

The stock of CMC Industries soared 4.7 percent higher on Monday after briefly testing its 200-day moving average earlier in the session. According to Commercial Metals, which posted fiscal Q1 profits through November on January 10, the company’s “increasing construction backlog in North America, as well as broad growth across major end markets in both North America and Europe” were among the highlights.


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Kathy Lewis

Kathy Lewis is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for writing, she loves writing for almost all the sections of Editorials99.

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