Steel Dynamics Inc.’s second-quarter profit narrowed sharply as the steelmaker and metals recycler continued to struggle with low steel prices tied to a global steel glut and record imports to the U.S.
Last month, the Fort Wayne, Ind., company warned that while shipments rebounded in the quarter, metal margins compressed as steel imports remained much higher than it had originally anticipated, weighing on steel prices.
On Monday, Chief Executive Mark D. Millett said in a news release he expects results to improve in the second half of the year on higher demand from the automotive, manufacturing and construction sectors.
Shares, down 4.8% this year, edged up 0.64% to $18.90 in late trading.
Cheap exports from China—the world’s largest steel producer and user—have been flooding the markets amid falling demand at home, driving down steel prices and forcing steelmakers around the world to idle mills and layoff workers.
The benchmark hot-rolled coil price in the U.S. is down 14.3% over the past 12 months to $465 per ton.
Last month, Steel Dynamics and other steelmakers filed a trade complaint alleging unfair pricing on imported steel from China, India, Italy, South Korea and Taiwan. On July 16, the U.S. International Trade Commission unanimously voted to continue the investigation, finding “a reasonable indication” that the U.S. industry was injured by imports.
Founded in 1993 as a “minimill” to make steel from scrap metal, Steel Dynamics has grown through acquisitions into one of the largest carbon steel producers in the U.S. But like its industry peers, Steel Dynamics has been battered by sharply lower oil and steel prices and lower-priced imports, exacerbated by the stronger dollar.
Overall, it reported profit of $31.6 million, or 13 cents a share, compared with $72.3 million, or 31 cents a share, a year earlier. Excluding a $29 million charge associated with its Minnesota ironmaking operations and other items, Steel Dynamics reported a profit of 22 cents a share.
It had projected a profit of 20 cents to 24 cents a share.
Net sales fell 3% to $2 billion, compared with the consensus of $1.98 billion on average, according to Thomson Reuters.