Steel Dynamics (SDI) produced 2.891mn nt of steel in Q1 2020, up by 5.3pc compared to the prior-year quarter and up by 9.2pc from Q4 2019. SDI shipped a total of 2.857mn nt of finished steel in Q1 2020, an increase of 6.1pc compared to 2.684mn nt Q1 2019. Total shipments were also up 7.4pc compared to 2.651mn nt in Q4 2019. External shipments of 2.495mn nt increased by 6.3pc compared to Q1 2019 and by 8.2pc compared to Q4 2019.
Flat roll shipments of 1.990mn nt accounted for 69.9pc of total shipments in Q1 2020, while the remaining 30.1pc or 0.857mn nt comprised of long product shipments. Long products shipped were 50.7pc structural and rail, 22.1pc engineered bar, 16.4pc from the Roanoke bar division, and 10.7pc from West Virginia division.
In the metal recycling division, ferrous scrap shipments of 1.192mn gt in Q1 2020 were up by 1.8pc compared to the prior-year quarter and 8.8pc higher compared to Q4 2019. SDI shipped 33.0pc of ferrous scrap externally. The volume 393,651gt, increased by 2.8pc in Q1 2020 compared to the same quarter last year and 8.9pc compared to the preceding quarter.
Nonferrous scrap shipments of 272,078lbs in Q1 2020, declined by 6.8pc compared to Q1 2019 but increased by 7.6pc compared to the immediately preceding Q4 2019.
Despite an increase in the volume of shipments, SDI reported Q1 2020 net sales of $2.58bn, down 8.5pc compared to $2.82mn in Q1 2019. Sales rose by 9.8pc compared to $2.35bn in Q4 2019.
Net income reached $187.34mn in Q1 2020, a decline of 8.3pc compared to $204.33mn in Q1 2019. Compared to the prior-year quarter, gross profit improved as the cost of goods sold declined from 84.6pc of sales to 83.9pc in Q1 2020.
Steel sales in the latest quarter accounted for 75.4pc or $1.94bn of consolidated sales for SDI, fabrication at 8.6pc or $220.94mn, metals recycling was 11.3pc at $291.86mn and the other category was 4.3pc. In Q1 2019, the percentage compositions were 75.4pc, 8.1pc, 12.5pc, and 4.0pc, respectively.
In Q1 2020, operating income for the company’s steel operations was $292.75mn as quarterly shipments offset metal spread compression, especially as finished steel prices faced downward pressure. Both flat roll and long products encountered strong demand throughout the quarter. Q1 2020 steel operating income declined 6.3pc from the same quarter last year while increasing 45.5pc compared to $201.27mn in Q1 2019.
Compared to Q4 2019, Q1 2020 average external product selling price for the company’s steel operations increased $10/nt or 1.3pc to $774/nt. Against the same quarter a year ago, the company’s steel operations average external selling price in Q1 2020 declined 14.2p.
The average ferrous scrap cost per ton melted increased $24/nt or 9.9pc to $267/nt from Q4 2019 to Q1 2020. Compared to Q1 2019, the latest quarter average ferrous scrap cost per melted ton decreased 21.0pc.
As a result of increased ferrous and nonferrous scrap selling values and shipments, Q1 2020 operating income from the company’s metals recycling operations rose to $8.33mn, compared to a loss of $5.25mn in Q4 2019. Compared to the same quarter a year ago, though, metals recycling income in Q1 2020 decreased 58.3pc from 19.96mn. Monthly ferrous prime scrap indices increased by approximately $30/gt during the first quarter.
Steel fabrication business segment order backlog is over 15pc higher than a year ago. Q1 2020 company’s steel fabrication operations remained strong at $29 million, down 12pc compared to Q4 2019, due primarily to seasonally lower shipments.
SDI entered 2020 with $1.6bn in cash available for the preparation of new $1.9bn Texas EAF flat roll steel mill, the construction for which began in January. Operations at the mill could commence in June 2021 as originally planned. SDI’s president and COO Mark Millet acknowledged the impact on domestic mills as a result of closures and softer demand per COVID-19 policies but noted it is too early to determine the full scope of the negative impact of COVID. He further added that the re-opening of the economy could result in fast replenishment by buyers facing low inventories throughout the supply chain.