Steel Dynamics, Inc. today provided fourth quarter 2022 earnings guidance in the range of $3.34 to $3.38 per diluted share.
Comparatively, the company's sequential third quarter 2022 earnings were $5.03 per diluted share, and prior year fourth quarter earnings were $5.49 per diluted share.
In a press release, the company said fourth quarter 2022 profitability from the company's steel operations is expected to be significantly lower than sequential third quarter results, based on seasonally lower shipments and metal spread compression, particularly within the flat roll operations.
Metal spread compression was amplified by higher raw material costs, as the flat roll operations work through higher than current market priced pig iron inventories ordered in early 2022 in reaction to the Ukraine and Russia supply chain disruptions, the company said.
The company believes flat roll steel prices have bottomed and expects them to increase into 2023 as underlying steel demand and corresponding order activity remain intact from the automotive, non-residential construction, industrial, and energy sectors with some weakness in the residential sector.
SDI also said that as ferrous and nonferrous scrap prices have stabilized, fourth quarter 2022 earnings from the company's metals recycling operations are expected to moderately improve compared to sequential third quarter results, based on increased volume more than offsetting lower average price realization.
Fourth quarter 2022 earnings from the company's steel fabrication operations are expected to be strong and remain steady with third quarter results, expanding metal spreads more than offsetting slightly lower seasonal volumes. The non-residential construction sector remains steady as evidenced by customer order activity supporting a continuing historically strong order backlog, which the company anticipates will continue through 2023.