Steel and aluminum producer Steel Dynamics (SDI) intends to relocate its planned recycled aluminum slab plant to Columbus, Mississippi, where the company has been ramping operations at its new aluminum rolling mill.
The Indiana-based company's disclosure comes after SDI decided to no longer build the facility in Benson, Arizona, saying on Wednesday that "differences with Arizona state officials risked the construction and operations of the facility".
SDI will incur a roughly $16mn hit to its second-quarter profit from asset write-downs related to the move. Still, the company estimated significantly higher earnings compared with the first quarter because of strength across its steel and aluminum operations.
The company anticipates higher sequential earnings from its aluminum segment, citing an increase in shipments and higher realized prices as SDI progresses with commissioning operations in Columbus. SDI, which runs the rolling mill under the name Aluminum Dynamics, expects to begin qualifying the facility's third cold-rolling mill in July and noted that it has begun shipping automotive flat-rolled products for customer approvals.
SDI expects meaningfully higher profitability in its steel operations on a sequential basis because of strong demand and a wider metal margin.
Average realized selling values rose by more than scrap raw material costs during the quarter. The spread between #1 busheling and hot-rolled coil hit a four-year high this week at $734/st, the widest since May 2022.
Persistently low steel inventories and firm underlying demand supported robust order activity and higher selling prices during the quarter. Underlying US steel demand across non-residential construction, energy, automotive and industrial sectors remained solid, SDI said.
The company expects earnings from its metals recycling operations to be on par with the previous quarter after unrealized non-ferrous scrap hedging losses offset increased ferrous and non-ferrous scrap shipments.
SDI expects earnings from its steel fabrication operations to be lower sequentially because higher input costs offset stronger shipments and steady selling prices. Commercial construction, data center and warehouse projects, manufacturing and healthcare demand supported steel fabrication activity. Its order backlog is about 40pc higher than a year earlier, extending into 2027, SDI said. It expects further volume gains this year and into 2027, supported by investment in US manufacturing and infrastructure sectors and ongoing onshoring activity.
The company expects second quarter earnings of $3.51-3.55/share, up from $2.01/share a year earlier.
SDI will report second quarter earnings on 20 July.
