Steel Dynamics (STLD, Financial) has witnessed an increase in sales of its steel-consuming products like appliances though its consumer spending declined slightly while exiting the quarter. The steel-consuming market forecasts look positive with automotive market illustrating 16.5 million units, mounting to approximately 18 million in the next few years. Generally, there’s favourable construction spending, enhancing 5% throughout August over the same period last year, whereas non-residential construction enhanced 6%.
Making impressive progress
Steel Dynamics key investors shipped a major 1.9 million tons of steel and its already existing steelmaking facilities exceeded its earlier record even on excluding the Columbus volumes.
The significant enhancement in the sales of its steel-consuming products is expected to drive healthy steel consumption and thus improved company revenue streams.
Steel Dynamics Engineered Bar and Structural Rail Divisions each gained solid quarterly shipments. The rail shipments increased by 12%.
Steel Dynamics is believed to be a major rail supplier in North America for the Class I railroads by qualifying the process for its premium rail and lining it for production. At present, Steel Dynamics is the lone steel manufacturer in North America that welds quarter-mile length strings, leveraging 320-foot rail compared to the historical 80-foot rail. This is considered to be a solid competitive advantage and lowers the rail's foot string by over 75%, a huge benefit for its customers, considerably reducing the expected railment failures.
Key markets to drive growth
Moving ahead, North American market is believed to become a major steel consumer and thus driving considerable demand for the steel products of the company.
Further, the domestic rail consumption is estimated to enhance in the next 3 to 5 years with the acquisition of both new and replacement rail as advised by railroad investment predictions, accelerated mainly by the U.S. Energy Sector. Steel Dynamics plans to expand its rail shipments in line with its growth forecasts and expects to supply equal to 350,000 tons yearly to satisfy their expanding requirements, which improves its profitability by expanding the product margins and lowering cost compression by increasing volume.
Steel Dynamics supplied more than 200,000 tons of standard rails in 2013. It estimates to enhance that figure by 10% or higher this year, with additional expansions in both mix and volume in 2015.
Hence, Steel Dynamics has expanded its business through the acquisition of both its innovative fresh and replacement rails.
Steel Dynamics growth of product offering and increased Engineered Bar capacity is continuing brilliantly. It has implemented more than 75% of the complete new lesser size range, and it’s witnessing solid customer feedback. Steel Dynamics prompt delivery and its trusted customer relationships developed on quality is expected to enable it in enhancing its market share to completely leverage the additional 325,000 tons of yearly rate in the approaching year.
Steel Dynamics acquisition of Columbus mill provided it with a single Flat Roll group, which allows it a platform to completely leverage its major competencies. The acquisition also enables it to grow robust relationships with its new and current customers, significantly exploiting logistical gains to develop greater values for them; widens its steel sheet product capacities by widening, gauging and strengthening the diversity; balancing on its present product portfolio with greater introduction in the development areas of automotive and energy; and it completely diversifies it organically into the superior-growth Mexican and Southern U.S. regions; utilizing synergies in its 2 extremely efficient flat-rolled steel mills and 8 developing coating lines allowing it with an exclusive opportunity to considerably enhance its shareholder value.
However, the Metals Recycling business of Steel Dynamics faced a tough quarter and declined delivering reduced profitability.
For the third quarter, Steel Dynamics monthly production rate on an average just exceeded 27,500 metric tons per month, an excellent enhancement over the previous months, and paving the way for expanding up to the needed volume.
Conclusion
The overall domestic joist shipments also enhanced 21% on year-over-year basis with Steel Dynamics joist shipments increasing more than 35%, performing exceptionally well, both in improving the market share and utilizing its national footprint.
