Announcing its first-quarter guidance on Wednesday, Steel Dynamics (SDI) said it expects to report Q1 earnings of between US$3.47 and US$3.51 per diluted share, down from Q4 2022 earnings of US$3.61 per diluted share. Profits also are expected to be down from Q1 2022 earnings of US$5.71 per diluted share.

However, 2022 was a record year for the company, and the first-quarter results will include costs from the start-up of SDI's new flat-rolled mill in Sinton, Texas. Those costs are expected to have an impact of 31 cents per diluted share, SDI said. 

Nevertheless, the company said profitability at its steel mills is expected to be greater than in the final quarter of 2022, based on increasing shipments.

“Steel pricing has since strengthened in the first quarter, and steel producer lead times have extended as steel demand is strong. The automotive, non-residential construction, energy and industrial sectors continue to lead demand,” it said.

However, earnings will be impacted as the mills continue to work down higher-cost pig iron that was purchased in early 2022 as Russia’s invasion of Ukraine was beginning.

Elsewhere, SDI’s steel fabrication business is expecting to report historically strong Q1 results. However, it said the business is seeing some impact to shipments resulting from customers’ extending backlogs and construction labor and materials shortages, which is leading to the delay of some projects.

Still, the non-residential construction sector remains strong, it said. “In addition, the continued onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial build-outs, supports strong demand in the coming years.”