SDI sees steel service center destocking ending

US steelmaker Steel Dynamics (SDI) anticipates a long period of steel service center destocking will soon end, supporting demand after lower prices and shipments cut into its third quarter profit.

The Indiana-based electric arc furnace (EAF) flat-rolled steelmaker said it expects US steel consumption to continue to grow, and along with further steel import reductions, will support the domestic market.

Service center shipments in September fell by 1.1pc from a year ago, the smallest monthly decline year to date, according to the Metals Service Center Institute (MSCI). The slowing pace of shipment declines indicates a slowdown in the destocking that US service centers have undertaken for much of the year.

SDI's third quarter profit fell as declines in steel pricing and shipments outweighed lower scrap prices.

Average steel prices fell to $809/st in the third quarter, down by 18pc compared to the same period last year. That outweighed the 22pc drop of SDI's average ferrous scrap cost to $275/st from the prior year,

External steel shipments fell by 5.1pc to 2.36mn st, while steel production fell by 4.1pc to 2.74mn st.

SDI's flat-rolled shipments were 1.53mn st from its Butler and Columbus divisions, and another 428,000st from its Techs, Heartland, and USS processing divisions.

Flat-rolled shipments consisted of 800,000st of hot-rolled coil (HRC), 197,000st of cold-rolled coil (CRC), and 958,000st of coated products. Those shipments are down compared to the third quarter 2018 shipments of 901,000st of HRC, CRC shipments of 138,000st, and coated shipments of 819,000st.

Third quarter ferrous scrap shipments totaled 1.17mn st, down by 10pc from the 1.30mn st shipped in the third quarter of 2018. Nonferrous scrap shipments fell to 257,000lbs, down by 7pc from the prior year,

SDI's profit fell by 62pc to $151.1mn in the third quarter from $398.4mn in the same year earlier period.