US long steelmaker and metals recycler Commercial Metals (CMC) is bullish that robust fabrication backlogs, elevated rebar metal margins and a positive outlook on construction demand will support shipment volumes through the first half of 2020.
The Irving, Texas-based company, which operates mills in the US and Poland, expects shipments to remain supported on robust backlogs even through seasonally slower US construction activity in the coming months, CMC chief executive Barbara Smith said today.
CMC shipped 1.2mn st of steel from its US mills in its fourth quarter ended 31 August, up from 841,000st in the same quarter a year earlier.
Shipments of rebar were boosted following the full integration of the four US rebar mills it acquired from Brazil-based steelmaker Gerdau, as well as the ramp up of its new Durant, Oklahoma, micromill.
Rebar shipments climbed by 86pc to 897,000st, while shipments of merchant bar and other products fell by 11pc to 319,000st from the prior year.
The company experienced less price volatility on rebar sales than the broader finished steel market, with ferrous scrap price declines outpacing the drop in finished steel sales prices, resulting in increased metal margins for the quarter, company executives said.
The average selling price across its US steel products fell by $29/st to $645/st on the quarter. The scrap-based producer's average ferrous scrap input cost fell by $80/st by comparison, pushing the metal margin to $399/st, up by $51/st on the year and $13/st higher than the prior quarter.
Higher metal margins helped lift earnings in CMC's US mills by nearly 51pc to $160mn from the same quarter a year earlier.
The company is confident that it will be able to maintain attractive metal margins in the near term.
CMC's US recycling segment profits sank by 75pc to $4.2mn from $16.9mn in the previous quarter as lower prices constrained volumes.
Shipments of ferrous scrap fell by 13pc to 559,000st as average selling prices dropped by 27pc to $217/st.
Nonferrous shipments fell to 122mn lbs from 138mn lbs, with selling prices falling to 90¢/lb from 97¢/lb in part because of persistent deterioration in global zorba prices.
Shipments in the company's international mill segment in Poland were mixed with merchant bar and other products trailing behind gains in rebar sales.
Rebar shipments rose to 151,000st from 145,000st, while merchant bar and other products fell to 237,000st from 289,000st.
The average selling prices across CMC's steel products in Poland fell by $55/st to $500/st. The fall outpaced a $40/st drop in ferrous scrap input costs, which lowered metal margins by $15/gt to $235/st. This drove the international mill segment earnings down to $22mn from $36mn.
CMC's profit across all segments on the quarter rose to $86.1mn on sales of $1.5bn from profits of $51mn on sales of $1.3bn a year earlier, reflecting increased capacity amid the acquisition and integration of the Gerdau rebar assets.
