Steel Dynamics Inc.

Steel Dynamics delivered another strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings. Records for steel shipments and price volume in their steel fabrication sector helped boost revenues across all platforms to a record $6.2 billion. As a result of record earnings from steel manufacturing, the company’s second quarter 2022 operating income of $1.6 billion increased 8% above first quarter results. As they continue to reduce their reliance on more expensive prime grades, the Omni platform is working with the steel melt teams to expand their shred segregation to produce more significant amounts of low residual scrap. Furthermore, the availability of pig iron has returned to normal, and prices have decreased dramatically to the low $50 per tonne area. Supply is not expected to be an issue because the company has enough pig iron to last well into the following year. The management further intends to build and run a low-carbon, recycled aluminum flat rolled mill with two auxiliary satellite recycled aluminum slab centers with a combined capacity of 650,000 tonnes. We maintain our ‘Hold’ rating with a revised target price.