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Steel Dynamics’ 1Q16 Market Share: The Impact of More Shipments

Mark O'Hara

Why Steel Dynamics Managed to Boost Its Earnings in 1Q16

(Continued from Prior Part)

Steel Dynamics’ 1Q16 revenues

Steel companies’ revenues are basically a function of shipments and average selling prices. Shipments depend on end user demand as well as import penetration. Over the last few quarters, US (DIA) steel companies including AK Steel (AKS), Nucor (NUE), and U.S. Steel Corporation (X) have reported fewer shipments due to more import penetration. However, we’ve seen US steel imports taper down significantly over the last couple of months. This trend has started to reflect in US steel production numbers, which has picked up. Let’s see how higher shipments impacted Steel Dynamics’ (STLD) 1Q16 revenues.

Revenues rise

Steel Dynamics reported revenues of $1.7 billion in 1Q16 versus $1.6 billion in 4Q15 and $2.04 billion in 1Q15. While the company’s revenues have risen on a sequential quarterly basis, they’ve actually fallen year-over-year. Having said that, markets don’t really expect steel companies to report a year-over-year increase in revenues. Though steel prices have risen sharply in 1Q16, they’re still much lower than in 1Q15.

Market share

The increase in Steel Dynamics’ revenues was led by higher shipments. The company shipped 2.1 million metric tons of steel in 1Q16—a year-over-year increase of 17%. Note that, in percentage terms, Steel Dynamics’ 1Q16 shipments have increased more than the increase in US steel production. This difference seems to suggest that the company gained market share from some of its peers.

Meanwhile, though more steel shipments helped Steel Dynamics’ 1Q16 revenues, average steel prices were a negative—as we’ll explore in the next part of this series.

Continue to Next Part

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