US minimill Steel Dynamics, Inc (SDI) announced a net income of $141M for the full year 2010 on net sales of $6.3bn across its five divisions. This compares with a 2009 net loss of $8M, on net sales of $4.0bn.
Q4 net income of $8M on net sales of $1.0bn was down on Q4 2009 when net income was $27M, on net sales of $1.2bn. For Q3 2010, net income was $19M, on net sales of $1.6bn.
Steel operations consist of five electric-arc-furnace (EAF) steel mills and related steel finishing and processing facilities. The company’s steel operations produce flat-rolled steel, structural steel, merchant bars, special-bar-quality steel, rail, and specialty shapes. Steel operations represented 60% and 61% of the company’s fourth quarter and annual 2010 external net sales, respectively.
Steel operations in 2010 had net sales of $4.0bn on shipments of 5.3Mston, compared to $2.6bn on shipments of 4.0Mt during 2009 (including intra-company sales and shipments). The annual 2010 average external selling price per ton was $774, an increase of $112 from 2009. The average scrap cost per ton in 2010 increased $107 from 2009. Annual 2010 operating income was $451M, or $86 per ton shipped, compared to $208M, or $52 per ton shipped in 2009. These figures are summarised in Table 1.
Table 1 Summary of SDI’s results
All Divisions 2010 2009 Change (%)
Net income ($M) 141 -(8.0) –
Net Sales ($bn) 6.3 4.0 57
Net Sales ($bn) 4.0 2.6 53.8
Shipments (Mston) 5.3 4.0 32.5
Av Selling Price ($/ton) 774 662 16.9
Av Operating income ($M) 451 208 116.8
Av Operating income ($/ton) 86 52 65.4
The Structural and Rail Division increased annual 2010 shipments of rail to 55kstons, of which over 22kstons were shipped in the fourth quarter.
Q4 2010 net sales for steel operations were $979M on shipments of 1.3Mstons compared to $790M on shipments of 1.2Mstons during the same period in 2009 (including intra-company sales and shipments).
The average external steel selling price for Q4 increased $67/ston from the Q4 2009 average of $686.
The Q4 average ferrous scrap cost per ton charged was up $81/ston on Q4 2009. Q4 operating income for the steel segment was $91M, or $70/ston shipped, compared to $88M, or $68/ston in Q3 and $108M, or $93/ston in Q4 2009.
Keith Busse, Chairman and CEO said. “The quarter ended on a much more positive note than it began, as our industry experienced generally increased demand resulting in sharply increased order entry and pricing for our operations. Early in the quarter our flat-rolled operations suffered from low volume and pricing; however, beginning in early November order entry increased, and was quickly followed by significant price increases related, in part, to increased scrap costs. Our long products operations also showed improvement in volume and pricing mid-quarter.
The scrap Division, OmniSource made ferrous shipments in 2010 of 5.2Mstons, 43% higher than the 3.6Mstons in 2009. OmniSource provided 47% of the ferrous scrap purchased by SDI’s mills during 2010.
The company’s Mesabi Nugget iron nugget ITmk3 facility which started up in January 2009 at Hoyt Lake, Minnesota, underwent a major outage to replace refractory in the rotary hearth furnace during November, and shortly after the furnace reheat, the need for other equipment modifications arose. These changes were made and operations resumed mid January. Mesabi Nugget start-up losses in Q4 reduced pre-tax earnings by $13M, and reduced annual results by $42M.
From earlier output data the operation has only reached about 25% design capacity over the 12months since start up.
Despite this, Busse said: “Although 2010 iron nugget production fell short of our initial estimates, we are pleased with the superior quality of the nugget being produced. We are gaining valuable development experience in refining the commercial-scale production process. Through iron supplied from Mesabi Nugget and Iron Dynamics, our steel operations were able to avoid high-priced foreign pig iron markets during the year. As 2011 progresses, we remain very optimistic concerning Mesabi’s continued production ramp-up”.
Looking ahead to 2011, Busse reports a favourable outlook despite an expected slow down but continual improvement in the US economy.
Present expectation is that steel consumption should grow in 2011 in the automotive, transportation, energy, industrial, and the agricultural and construction equipment sectors. Residential and non-residential construction activity is likely now at its bottom; thus, SDI expect to see continued soft to very moderate near-term growth in demand in this sector.