Steel Dynamics, Inc. provided second quarter 2020 earnings guidance in the range of $0.29 to $0.33 per diluted share. Comparatively, the company’s sequential first quarter 2020 earnings were $0.88 per diluted share and prior year second quarter earnings were $0.87 per diluted share.
In a press release, Steel Dynamics said second quarter 2020 earnings from the company’s steel operations are expected to be significantly lower than sequential first quarter results, due to lower shipments and selling values as a result of 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 and have just recently begun restarting production. However, construction related steel demand has been steadier than industrial manufacturing throughout the second quarter.
As domestic manufacturing slowed and states issued shelter-in-place mandates, scrap supply and collection declined, SDI said. In addition, significantly lower domestic steel production resulted in weak scrap demand. As a result, the company’s metals recycling operations are expected to record an operating loss for the second quarter 2020.
As states begin to reopen and steel consuming businesses resume operations, the company anticipates steel and recycled scrap volumes will improve. The company believes trade protections that are already in place will continue to limit the amount of unfairly traded steel products coming into the United States, providing additional support for domestic steel mill utilization.
The customer order backlog for the company’s steel fabrication platform is strong and customers remain constructive concerning non-residential construction projects. At this time, the company has not seen widespread project delays or cancellations. Second quarter 2020 earnings from the company’s steel fabrication operations are expected to be on pace with strong sequential first quarter results.