Steel Dynamics, Inc. today announced second quarter 2020 financial results. The company reported second quarter 2020 net sales of $2.1 billion and net income of $75 million. Comparatively, prior year second quarter net sales were $2.8 billion, with net income of $194 million, and sequential first quarter 2020 net sales were $2.6 billion, with net income of $187 million.
Second quarter 2020 operating income for the company’s steel operations was $172 million, or 41 percent lower than sequential first quarter results, due to lower selling values and shipments related to the temporary closures of numerous steel consuming businesses in response to the coronavirus (COVID-19) pandemic.
Domestic automotive producers and the related supply chain idled operations beginning in March 2020 and slowly began restarting production in May and June. Construction related steel demand was steadier than industrial manufacturing throughout the second quarter. The second quarter 2020 average external product selling price for the company’s steel operations decreased $19 sequentially to $755 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills decreased $1 sequentially to $266 per ton.
The company’s steel mill’s operated at 79 percent of their production capability during the second quarter 2020, with the flat roll group achieving a rate of 89 percent. Additionally, second quarter 2020 steel shipments of 2.5 million tons were only 12 percent lower than record high sequential first quarter shipments of 2.8 million tons, and only nine percent lower than the second quarter of 2019.
Second quarter 2020 operating income from the company’s steel fabrication operations reached $27 million, nearly equal to sequential first quarter results of $29 million, based on steady shipments. The steel fabrication platform’s customer order backlog remains strong, the company said, and customers remain constructive concerning non-residential construction projects. The team has not seen widespread project delays or cancellations.
As for an outlook, Mark D. Millett, President and Chief Executive Officer, said it is “still not possible to determine the full scope of the negative impact COVID-19 will cause to global economies and the related impact to domestic steel demand.”
Millett said that as states continue to determine their reopening guidelines and many steel consuming businesses have resumed operations, “We anticipate steel and metals recycling demand will improve in the second half of the year compared to second quarter 2020 trough results. The automotive sector and its related supply chain have restarted production, and we have started to see some resulting increase in steel demand and prime scrap production. The construction sector has remained more resilient and related steel demand has been steady, as evidenced by our Structural and Rail Division volume and steel fabrication platform’s customer backlog. The weaker sectors continue to be related to energy and general industrial consumers, which likely require a longer recovery period.”