CMC expects strong steel demand to continue
Long products producer Commercial Metals (CMC) expects demand in the US and Poland to remain strong after boosting its steel and scrap shipments in the US in the third quarter.
CMC president Barbara Smith said today that increased business investment and non-residential construction activity nearing pre-financial crisis levels in the US and Poland are suggestive of "continuing economic growth and strong long steel product demand."
The Irving, Texas-based company shipped 811,000st of steel from its US mills in its third quarter ended 31 May, up from 722,000st in the same quarter a year earlier. Rebar shipments rose by 13pc to 503,000st, while shipments of merchant bar and other products rose by 11pc to 308,000st.
Fourth quarter volumes are expected to be in line with the third quarter.
The average selling price across all of its Americas steel products rose by $92/st to $632/st on the quarter. The scrap-based producer's average ferrous scrap input cost rose by $63/st by comparison, pushing metal margin up by $29/st from the prior year to $303/st.
Increased output from the company's new Durant, Oklahoma, rebar micro-mill contributed to rebar volume growth on the quarter, shipping just shy of 30,000st. Smith expects the mill to be ramped up to its full capacity of 350,000 st/yr in the second half of the 2019 fiscal year.
CMC is also preparing to close on the acquisition of four long products mills from Gerdau. Smith anticipates that the deal will receive regulatory approval by the end of 2018.
Strong finished steel demand also boosted volume and prices in CMC's US recycling segment. Shipments of ferrous scrap rose to 642,000st at $314/st from 590,000st at $264/st, while non-ferrous shipments rose to 65,000st at $2,252/st from 61,000st at $2,017/st.
Smith did not offer any specific outlook on scrap prices, but suggested that higher rebar prices in July may boost metal margins "assuming that scrap prices stabilize" as they did in June.
The company's international mills segment in Poland shipped less steel even as prices rose from the prior year. Rebar shipments fell to 79,000st from 107,000st, while shipments of merchant bar and other products ticked down to 241,000st from 247,000st.
The average selling price across steel products rose by $156/st to $599/st, while ferrous scrap input costs rose by $76/st to $329/st. This pushed metal margin up by $80/st to $270/st.
Fabrication segment volume also fell as prices rose, shipping 302,000st at $777/st, down from 310,000st at $775/st.
CMC earned a profit of $40mn on sales of $1.2bn in the quarter, up from profit of $39.3mn on sales of $1bn in the same period a year earlier.
The company recorded a profit of $86.9mn on sales of $3.3bn through the first nine months of its fiscal year, up from profit of $75.9mn on sales of $2.8bn in the same prior-year period.
Year-to-date steel shipments in the US rose by 8pc to 2.2mn, with ferrous scrap shipments in the US up by 26pc at 1.8mn and non-ferrous scrap shipments up by 19pc at 194,000st.
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