Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

STEEL DYNAMICS, INC.

(STLD)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

U.S. manufacturers grapple with steel shortages, soaring prices

02/23/2021 | 06:47am EDT
An operator checks a part dimension on a metal storage cabinet component at Tennsco's factory in Dickson

CHICAGO (Reuters) - An aerospace parts maker in California is struggling to procure cold-rolled steel, while an auto and appliance parts manufacturer in Indiana is unable to secure additional supplies of hot-rolled steel from mills.

Both companies and more are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply in the United States and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low, according to data from the Census Bureau. The benchmark price for hot-rolled steel hit $1,176/ton this month, its highest level in at least 13 years.

Soaring prices are driving up costs and squeezing profits at steel-consuming manufacturers, provoking a new round of calls to end former President Donald Trump's steel tariffs.

"Our members have been reporting that they have never seen such chaos in the steel market," said Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users.

The group, which represents more than 30,000 companies in the manufacturing sector and downstream supply chains, this month asked President Joe Biden to terminate Trump's metal tariffs.

Domestic steel mills that idled furnaces last year amid fears of a prolonged pandemic-induced economic downturn have been slow in ramping up production, despite a recovery in demand for cars and trucks, appliances, and other steel products. Capacity utilization rates at steel mills - a measure of how fully production capacity is being used - has moved up to 75% after falling to 56% in the second quarter of 2020 but is still way below 82% in last February.

Steel shipments are up, but still below last year's levels.

A TIGHT STEEL MARKET

Steel producer Steel Dynamics last month said it can't get enough flat-roll sheets even for its own internal operations.

"It is very frustrating," said Hale Foote, president at California-based aerospace parts maker Scandic Springs. "I am looking at great business...but I don't have any material supply."

Scandic Springs faces the risk of losing a $1 million annual contract as it can't find a domestic supplier ready to supply 240,000 pounds of cold-rolled steel.

Indiana-based Stone City Products, which supplies components to appliance and automotive companies, is also hard-pressed to procure 2 million tons of hot-rolled steel a year for a new project.

The company has seen a dramatic turnaround in business after the pandemic lows in the second quarter of 2020 when orders plunged 50%. Its order book is now 25% above pre-pandemic levels.

To keep up, it is running its factories seven days a week and has increased headcount by 40%. But steel that used to get delivered in eight weeks last year now takes 12-16 weeks. Mills are not accepting requests for additional purchases.

"We have been hand to mouth with a lot of customer requirement," said Stewart Rariden, the company's president.

LUCKY TO BREAK EVEN

Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary - whether to absorb or pass along the increased cost.

"We'll be lucky if we break even at this price," said Stuart Speyer, president at Tennessee-based Tennsco. Steel costs for the manufacturer of lockers, bookcases and cabinets are up 98% in the past six months.

Whirlpool last month said increased steel costs would shave 150 basis points from its profit this year. Farm equipment maker AGCO and crane maker Terex have announced price increases to offset material costs.

In its "flash" purchasing managers survey for February, IHS Markit's prices paid index for factories was the highest since 2011 and its gauge of prices received for finished products was the highest since 2008.

The run-up in steel prices comes at a time when the expectation of additional fiscal stimulus and a faster vaccine rollout is fueling fears of widespread inflationary pressure.

However, policymakers like Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen do not foresee a prolonged and broadbased rise in prices anytime soon with U.S. unemployment still well above pre-pandemic levels and more than 18 million Americans drawing some form of government jobless benefit.

AMERICAN VERSUS IMPORTED STEEL

Record-high prices, meanwhile, are turning out to be a bonanza for steel producers. Shares of American steel makers have gained 65% since last August. An analysis by rating agency Fitch shows U.S. steel makers enjoyed a profit margin of 45% in January. Nucor expects to post the highest-ever first- quarter profit.

Steel industry and union groups last month urged Biden to keep the steel tariffs in place, calling them 'essential' to the domestic industry. Steel producers are facing their own higher costs following a rise in scrap and iron ore prices.

U.S. steel prices are 68% higher than the global market price and almost double China's, even with prices in both China and Europe up over 80% from their pandemic-induced lows.

The price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.

Logistical challenges, like container shortages, and thin overseas supply are keeping imports in check. But some distributors expect imports to pick up by June if the domestic market remains tight.

Uncertainty over the tariff outlook is one factor keeping the wraps on domestic steel output.

Angela Reed, an executive at Atlanta-based steel distributor Reibus International, says an expected review of the import restrictions is delaying a ramp-up in production and a build-up in inventories as easing of the curbs will likely drive down the domestic prices.

"(People) are trying to make sure that they don't get hung with any of the higher-priced stuff," Reed said.

(Reporting by Rajesh Kumar Singh; Editing by Andrea Ricci)

By Rajesh Kumar Singh


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AGCO CORPORATION -1.93% 129.56 Delayed Quote.25.68%
CRANE CO. -0.81% 96.44 Delayed Quote.25.20%
NUCOR CORPORATION -1.87% 102.08 Delayed Quote.95.56%
STEEL DYNAMICS, INC. -2.39% 62.91 Delayed Quote.70.63%
TEREX CORPORATION -0.52% 47.67 Delayed Quote.36.63%
WHIRLPOOL CORPORATION 0.01% 221.56 Delayed Quote.22.75%
WHIRLPOOL S.A. -0.23% 8.86 End-of-day quote.8.58%
All news about STEEL DYNAMICS, INC.
07/26STEEL DYNAMICS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND..
AQ
07/26GLOBAL MARKETS LIVE : Hasbro, Lockheed Martin, Tencent, Roche, Vodafone...
07/21STEEL DYNAMICS INC : Results of Operations and Financial Condition, Financial St..
AQ
07/20REMINDER : Steel Dynamics Announces Second Quarter 2021 Earnings Conference Call..
PR
07/19STEEL DYNAMICS : Second Quarter 2021 Investor Call Presentation
PU
07/19STEEL DYNAMICS : Earnings, Sales Increase in Q2; Unveils $1 Billion Share Buybac..
MT
07/19STEEL DYNAMICS : Q2 Earnings Snapshot
AQ
07/19STEEL DYNAMICS : Reports Record Second Quarter 2021 Results
PU
07/19STEEL DYNAMICS : Earnings Flash (STLD) STEEL DYNAMICS Reports Q2 Revenue $4.47B,..
MT
07/19Steel Dynamics, Inc. Reports Earnings Results for the Second Quarter Ended Ju..
CI
More news
Financials (USD)
Sales 2021 17 090 M - -
Net income 2021 2 896 M - -
Net Debt 2021 476 M - -
P/E ratio 2021 4,62x
Yield 2021 1,65%
Capitalization 12 841 M 12 841 M -
EV / Sales 2021 0,78x
EV / Sales 2022 0,75x
Nbr of Employees 9 625
Free-Float 72,9%
Chart STEEL DYNAMICS, INC.
Duration : Period :
Steel Dynamics, Inc. Technical Analysis Chart | STLD | US8581191009 | MarketScreener
Technical analysis trends STEEL DYNAMICS, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 11
Last Close Price 62,91 $
Average target price 79,67 $
Spread / Average Target 26,6%
EPS Revisions
Managers and Directors
Mark D. Millett Chairman, President & Chief Executive Officer
Theresa E. Wagler Chief Financial Officer & Executive Vice President
Robert E. Francis Chief Information Officer & Vice President
Frank D. Byrne Independent Director
James C. Marcuccilli Lead Independent Director
Sector and Competitors
1st jan.Capi. (M$)
STEEL DYNAMICS, INC.70.63%12 841
ARCELORMITTAL52.83%32 595
NUCOR CORPORATION91.92%30 550
POSCO32.35%24 061
TATA STEEL LIMITED119.09%23 193
NIPPON STEEL CORPORATION50.34%15 872