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‘Challenging’ end to 2015 for SDI’s recycling arm

United States – The market environment in the final quarter of 2015 ‘was one of the most challenging in recent history for our steel and metals recycling operations’, stated Mark D. Millett, ceo of US-based Steel Dynamics, Inc. (SDI), following the release of the company’s latest financial results.

The domestic steel industry operated at production rates below 65% in November and December through ongoing pressure from ‘unfairly-traded’ steel imports, customer destocking and seasonally lower demand, according to Millett. However, he added, SDI achieved average production utilisation of 73% for the fourth quarter.

Average steel product pricing declined more than consumed raw material scrap costs, resulting in slight steel metal spread compression; the fourth quarter average product selling price for the company’s steel operations decreased by US$ 51 to US$ 614 per ton whereas the average ferrous scrap cost per ton melted dropped by US$ 47 to US$ 205.

The company’s metals recycling operations recorded an adjusted fourth quarter 2015 operating loss of US$ 16 million compared to a third quarter operating income of US$ 463 000. Based on lower domestic steel mill production utilisation and traditional year-end steel mill scrap inventory reduction, there was a 12% decline in fourth quarter ferrous scrap shipments for SDI.

‘While underlying steel demand in certain market sectors remains steady and import levels have somewhat declined, the issue of unfairly-traded steel imports persists,’ Millett concluded. ‘We believe that customer steel inventories have started to realign with current demand dynamics, and when combined with scrap price stabilisation and moderating steel import volumes, presents an environment that could result in increased 2016 domestic steel production.’

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