NEW YORK Steel Dynamics
Inc. (SDI) sees promising signs for the year ahead in
automotive and nonresidential markets, as well as benefits from
its own iron ore production, company executives told investors
during a Jan. 29 conference call.
"The ABI (architecture billings
index) has been (positive) for five consecutive months," SDI
chief executive officer Mark Millett said. "The nonresidential
construction market is still challenging, (but) we see
selective areas that show signs of improvement. ... We are
poised to take full advantage when the construction market
An economically challenging 2012
did not prevent Fort Wayne, Ind.-based Steel Dynamics from
doubling its fourth-quarter net income to $61 million compared
with the same period a year earlier despite sales that fell 8.3
percent to $1.71 billion, but the companys full-year net
income tumbled 41.2 percent to $163.6 million on sales that
declined 8.8 percent to $7.29 billion (
amm.com, Jan. 28). Executives attributed the sales
decrease to tepid 2012 market conditions, poorer margins
between volatile scrap prices and steel selling prices, and
uneasy consumer confidence.
Millett said 2012 was a "tough
year for business as global economic conditions remained
difficult. Gross domestic product was weak. Consumer confidence
waned. We had angst about U.S. elections. Nonetheless ... we
believe there are reasons for optimism in 2013 and the years
ahead." He pointed to signs of a returning manufacturing sector
in the United States as a boon for domestic markets, citing
increased natural gas development and iron ore production as
SDI has expanded into iron ore
production in recent years, vertically integrating its supply
chain by investing in Minnesota ventures. The companys
81-percent-owned subsidiary, Hoyt Lakes, Minn.-based Mesabi
Nugget LLC, produced 20,000 tons of iron ore per month in
November and December and is aiming for annual production of
350,000 tons by the end of 2013 at its Minnesota locations.
"One of the key aspects of our
success has been controlling our costs as far into the supply
chain as possible," Millett said. "Production at our Minnesota
operations ... could have fully supported our steel production
requirements (last year). ... This is a pivotal achievement in
lowering our iron ore input costs."
Iron ore prices will be one of
several factors that will determine SDIs success in 2013,
along with the continued relative strength of the auto and
manufacturing markets, he said.
"Supply chain inventories remain
relatively tight. Automotive remains incredibly robust.
Manufacturing in our mind is robust. And I think lead times
have moved back," Millett said. "Obviously (iron) ore pricing
is appreciating and there could be some market support from
(all) those drivers."