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Released October 18, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--A sharp drop in its latest quarterly profits due to flagging steel prices and falling demand notwithstanding, executives with Steel Dynamics (NASDAQ:STLD) (Fort Wayne, Indiana) say the company's capital expenditures for 2020 are likely to run between $1.2 billion and $1.3 billion, with a big chunk of the money earmarked for a new steel mill project in Sinton, Texas. Industrial Info is tracking more than $2.4 billion worth of project activity by the steel producer.
Click on the image at right for a graph showing Steel Dynamics project activity by state.
The company reported net income of $151 million for third-quarter 2019, less than half of net income of $398 million reported a year earlier. Sales for the just-ended quarter were $2.5 billion, compared with $3.2 billion reported a year earlier.
Chief Executive Officer Mark Millett on Wednesday cited a "challenging steel pricing environment" during the quarter, in which the drop in average steel pricing more than offset the benefit of lower scrap steel costs. Third-quarter steel prices for the company's overall steel operations fell $70 from the second quarter to $809 per ton, while the average ferrous scrap cost per ton melted at the company's steel mills decreased $41 to $275 per ton.
Flagging steel prices have had an impact this year on other steel producers such as United States Steel Corporation (NYSE:X) (Pittsburgh, Pennsylvania), which has announced layoffs and the idling of several steel furnaces as a result. For more information, see August 26, 2019, article - U.S. Steel Cuts Jobs, Idles Furnaces as Demand and Prices for Steel Tumble.
Nonetheless, underlying domestic steel demand "appears principally intact," with oil and gas steel pipeline consumption remaining strong and steel demand in Mexico set for growth in coming years, Millet told industry analysts during the company's earnings conference call.
In related news, the American Iron and Steel Institute (AISI) reported last week that U.S. steel mills shipped 8.4 million net tons in August, a 4.4% increase from the net tons shipped in July, and a 0.4% increase from the amount reported in August 2018.
Millet touted Steel Dynamics' decision earlier this year to build a 3 million-ton-per-year, flat-rolled, electric-arc-furnace (EAF) steel mill in Sinton, Texas, as a sign of the market opportunities to come. The $1.9 billion mill will serve markets in both Mexico and the U.S. Construction is expected to kick off in early 2020, followed by the start of operations in midyear 2021. For more information, see Industrial Info's project report.
Millet also noted the company's Galvanizing Line #3 Addition project at its Columbus Steel Mill in Mississippi. Construction of the 400,000-ton-per-year line kicked off in mid-2019, with completion planned for mid-2020. For more information, see Industrial Info's project report.
Chief Financial Officer Theresa Wagler said she expects capital expenditures for next year to be between $1.2 billion and $1.3 billion, but added the numbers have yet to be finalized.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The company reported net income of $151 million for third-quarter 2019, less than half of net income of $398 million reported a year earlier. Sales for the just-ended quarter were $2.5 billion, compared with $3.2 billion reported a year earlier.
Chief Executive Officer Mark Millett on Wednesday cited a "challenging steel pricing environment" during the quarter, in which the drop in average steel pricing more than offset the benefit of lower scrap steel costs. Third-quarter steel prices for the company's overall steel operations fell $70 from the second quarter to $809 per ton, while the average ferrous scrap cost per ton melted at the company's steel mills decreased $41 to $275 per ton.
Flagging steel prices have had an impact this year on other steel producers such as United States Steel Corporation (NYSE:X) (Pittsburgh, Pennsylvania), which has announced layoffs and the idling of several steel furnaces as a result. For more information, see August 26, 2019, article - U.S. Steel Cuts Jobs, Idles Furnaces as Demand and Prices for Steel Tumble.
Nonetheless, underlying domestic steel demand "appears principally intact," with oil and gas steel pipeline consumption remaining strong and steel demand in Mexico set for growth in coming years, Millet told industry analysts during the company's earnings conference call.
In related news, the American Iron and Steel Institute (AISI) reported last week that U.S. steel mills shipped 8.4 million net tons in August, a 4.4% increase from the net tons shipped in July, and a 0.4% increase from the amount reported in August 2018.
Millet touted Steel Dynamics' decision earlier this year to build a 3 million-ton-per-year, flat-rolled, electric-arc-furnace (EAF) steel mill in Sinton, Texas, as a sign of the market opportunities to come. The $1.9 billion mill will serve markets in both Mexico and the U.S. Construction is expected to kick off in early 2020, followed by the start of operations in midyear 2021. For more information, see Industrial Info's project report.
Millet also noted the company's Galvanizing Line #3 Addition project at its Columbus Steel Mill in Mississippi. Construction of the 400,000-ton-per-year line kicked off in mid-2019, with completion planned for mid-2020. For more information, see Industrial Info's project report.
Chief Financial Officer Theresa Wagler said she expects capital expenditures for next year to be between $1.2 billion and $1.3 billion, but added the numbers have yet to be finalized.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
