Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

<p>This steel and aluminum maker gets 49% of its sales from construction-related industries. New building has been hobbled by high interest rates, and revenue fell 7% in 2024, to $17.5&nbsp;billion. But the imposition of higher tariffs on imported steel could boost Steel Dynamics, whose shares had risen 16% for the year as of mid-May.
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Steel Dynamics (STLD): Company Profile, Stock Price, News, Rankings

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Steel Dynamics

steel dynamics

Good day, and welcome to the Steel Dynamics Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After management's remarks, we will conduct a question and answer session, and instructions will follow at that time. Please be advised this call is being recorded today, 07/22/2025, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect.

At this time, I would like to turn the conference over to David Lipchitz, Director, Investor Relations. Please go ahead.

Thank you, Holly. Good morning, and welcome to Steel Dynamics' second quarter twenty twenty five earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics Teresa Waggler, Executive Vice President and Chief Financial Officer and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward looking and predictive, typically preceded by believe, expect, anticipate, or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with the anticipated project returns in our steel, metals recycling, and fabrication businesses as well as the general business and economic conditions. Examples of these are described in the related press release as well as in our annual filed SEC Form 10 ks under the headings Forward Looking Statements and Risk Factors found on the Internet at www.sec.gov and, if applicable, in any later SEC Form 10 Q. You'll also find any referenced non GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Second Quarter twenty twenty five Results.

And now I'm pleased to turn the call over to Mark.

Super. Thank you, David, and good morning, everyone. Thank you for being with us on our second quarter twenty twenty five earnings call. As evident in our release, our teams achieved a solid second quarter performance. And most fulfilling to me was the team's overall safety performance.

They achieved an all time low quarterly recordable and lost time injury rates. In fact, eighty percent of our over 100 locations didn't even have a single recordable injury. It's a supreme achievement by the team. My sincere thanks to everyone involved. Although experiencing some challenges in the second quarter relating to Vendor oxygen supply that inhibited steel production, the Synton team continued their progress.

They increased sequential earnings, achieving pretax breakeven and another positive EBITDA quarter. We expect a steep acceleration of profitability for the remainder of this year and next. We believe we have reached an earnings inflection point for Steel Fabrication with expectations for increased profitability in the third quarter. We achieved record quarterly metals recycling shipments. Adjusted EBITDA was five thirty three million dollars Biocarbon is in the midst of commissioning with expectations for product shipments to begin later in the third quarter.

We were awarded the Volkswagen Global Group Award for Sustainability. It's a testament to our low carbon steel program and its associated impact on us becoming the supplier of choice for auto groups expanding in The U. S. And aluminum is here. We shipped our first commercial quality aluminum flat rolled coils on June 16.

So congratulations to absolutely everyone involved there. Phenomenal, phenomenal progress. So we are we are successfully executing on many fronts, and I'm proud of the entire Steel Dynamics team. There's no doubt they are the foundation of our company and remain our first and foremost priority. As such, we are focused on providing the very best for their health and safety.

We're building a world class safety culture. Our team's dedication to our Take Control safety program is absolutely extraordinary and resulted in the record metrics this quarter. Continually inspired by the commitment of our team members have for one another, they consider themselves family and challenge the status quo each and every day. But that said, there will always be more to do as we strive for a zero incident environment. So with that introduction, Theresa, some sales on the quarter.

Thank you, Mark. Good morning, everyone. Thanks for joining us. Our second quarter two thousand twenty five net income was $299,000,000 or $2.01 per diluted share, which with adjusted EBITDA of $533,000,000. Second quarter two thousand twenty five revenue of $4,600,000,000 was above sequential first quarter results due to higher realized deal pricing across the platform.

Our second quarter operating income of $383,000,000 was 39% higher than the first quarter results driven by steel metal spread expansion as pricing increased more than scrap raw material costs. As we discussed our business this morning, we continue to focus and execute on our transformational growth initiatives. Our steel operations generated operating income of $382,000,000 in the second quarter, over 65% higher sequentially due to average realized pricing increasing $136 to $11.34 dollars per ton, while total shipments were modestly lower due to a decline in flat rolled shipments. Earnings from the steel platform were reduced in the second quarter by approximately $32,000,000 due to a noncash write off of consumable assets. They were also negatively impacted as Sinton shipments were reduced by approximately 55,000 tons due to a reduced vendor supply of oxygen, which has since been restored.

For those, for modeling purposes, for shipments in the second quarter, hot rolled shipments were 930,000 tons, cold rolled shipments were 114,000 tons, and finally, coated shipments were 1,387,000 tons. For the second quarter, operating income from our metal recycling operations was $21,000,000 or $4,000,000 lower than sequential first quarter results due to lower realized ferrous pricing as primes were down about $50 per ton and other grades $80 per ton. The price differential more than offset the team's record shipments. We are already the largest North American metals recycler for ferrous and nonferrous metals, and we're growing in support of our increased steel capacity and aluminum flat roll operations through new and expanded supplier relationships and through the use of innovative new separation technologies. Our mills recycling platform is a significant competitive advantage for our steel, aluminum, and copper operations.

Our steel fabrication team achieved operating income of $93,000,000 in the second quarter, lower than first quarter results as realized pricing declined modestly and steel substrate costs increased compressing margins. Federal programs, manufacturing growth, and onshoring are expected to support domestic fixed asset investment and related flat and long product steel and steel joist and deck consumption in the coming years. As for our aluminum operations, I also wanna send a huge congratulations to the team on their first shipment. It truly is an exceptional exceptional accomplishment. Operating losses from the aluminum operations totaled $69,000,000 in the first half of twenty twenty five.

We estimate comparative losses to be in the range of $40,000,000 for the third quarter of twenty twenty five, which is consistent with second quarter results, then improving to between $15,000,000 and $20,000,000 for the fourth quarter as we complete commissioning, commence product certifications, and ramp production. Based on current dynamics, we continue to believe we will achieve monthly EBITDA positive results before the end of twenty twenty five. Additionally, in connection with start up, we will stop capitalizing interest expense associated with the aluminum project. As such, we estimate interest expense to increase to about $30,000,000 in the coming third quarter and to the full $45,000,000 in the fourth quarter. Related to cash flow, during the second quarter of twenty twenty five, we generated cash flow from operations of $3.00 $2,000,000 Working capital grew $131,000,000 in the quarter as we grew inventories for our new aluminum investments.

In June, we repaid our two point four percent $400,000,000 senior notes that matured. We ended the quarter with liquidity of $1,900,000,000 comprised of cash and short term investments of $744,000,000 and our fully available unsecured revolver. For the second half of twenty twenty five, we believe capital investments will be in the range of $400,000,000 with the majority related to the completion of our aluminum and biocarbon growth investments. In February, we increased our quarterly cash dividend 9% to 50¢ per common share, continuing our positive dividend profile. We also repurchased $200,000,000 of our common stock in the second quarter, representing over 1% of our outstanding shares.

At June 30, dollars 1,200,000,000.0 remained authorized and available for share repurchases. These actions reflect the strength of our capital foundation consistently strong cash flow generation capability and the continued optimism and confidence in our future. Our capital allocation strategy prioritizes high return strategic growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program while we remain dedicated to preserving our investment grade credit designation. Our free cash flow profile has fundamentally changed over the last five years from an annual average of $540,000,000 to $3,000,000,000 excluding our large strategic scented and aluminum investments. We placed ourselves in a position of strength to have sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment grade credit metrics.

We're squarely positioned for the continuation of sustainable, optimized long term value creation. In alignment with the one and a half degree scenarios set forth in the Paris Agreement, we have an interim twenty thirty emissions intensity target, which represents a 15% reduction in our greenhouse gas intensity and a twenty fifty emissions intensity target. We announced during the second quarter that each of our company's steel mills achieved global steel climate council product certification. For our customers, this means greater transparency and confidence when sourcing lower embodied carbon steel products. The GSCC certification verifies emissions data through a certified science based standard aligned with the Paris Agreement.

Decarbonization is a meaningful part of our long term value creation strategy, and we're dedicated to our people, our communities, and our environment. We're committing to operating our business with the highest integrity. In that regard, we grow in our excitement concerning our first biocarbon production facility as it transitions from construction to commissioning with expectations, as Mark mentioned, for production to begin in the coming months. We believe our first facility could decrease our steel scope one greenhouse gas emissions by as much as 35% and, more importantly, provide unique value and supply chain opportunities for many of our OEM flat rolled steel customers. We uniquely have an actionable path that is more manageable and we believe considerably less expensive than may lay ahead for many of our industry peers.

Our carbon reduction strategy is an ongoing journey, and we're moving forward with the intention to make a positive difference. Thank you.

Thank you, Teresa. Our steel fabrication operations achieved a solid performance in the second quarter in a somewhat challenging environment as steel input costs increased and customer hesitancy prevented any meaningful increase in volume. However, order activity remained solid with the order backlog increasing by 15% since the beginning of the year and now extending into 2026. Pricing for steel joists and deck bookings has remained relatively stable through the first half of the year. Based on the current market environment, we believe we have reached an inflection point in profitability from our fabrication operations and expect third quarter earnings to improve sequentially.

We continue to have high expectations for the business based on continued onshoring of manufacturing, recently announced significant privately funded manufacturing projects and public funding for infrastructure and other fixed asset investment programs. The long term uplift from this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel operations, critical and softer demand environments, allowing for higher through cycle steel utilization compared to our peers. It also helps mitigate the impact of lower steel prices. Earnings from our metals recycling operation were modestly lower in the second quarter despite record shipments due to lower realized ferrous scrap prices as scrap flows were steady and exports declined.

We believe ferrous scrap prices have stabilized and are likely to remain relatively steady throughout the rest of the year aside from the typical seasonal fluctuations. Additionally, the team continues to expand its access to recycled aluminum in preparation for the ramp up of our aluminum flat rolled operations. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers. Our metals recycling team is also partnering more closely with both our steel and aluminum teams to ex expand scrap separation capabilities through advanced process and technology solutions. This collaboration helps mitigate supply risk by making more grades of ferrous and nonferrous scrap usable for our steel and aluminum production.

Additionally, it positions us to significantly increase the recycled content in our aluminum flat rolled products, unlocking enhanced earnings opportunities. The steel team delivered a solid quarter with shipments of 3,300,000 tons. In the second quarter of twenty twenty five, the domestic steel industry operated at estimated production utilization rate of 77%, while our steel mills operated at a notably higher rate of 85%. This consistently higher utilization reflects our value added steel product diversification, differentiated customer supplied solutions and strong support from our internal manufacturing businesses. Our elevated through cycle utilization rate is a key competitive advantage, underpinning our growing cash generation capability.

Our realized steel pricing increased throughout our product portfolio in the second quarter. And just last week, long products saw additional price improvement. Overall, domestic steel inventories remain lean from a historical basis. However, coated flat rolled steel volume and pricing compressed during the quarter due to an inventory overhang related to imports that were received just ahead of the final ruling related to the associated industry trade case. Last fall, we and other industry participants initiated a trade case related to these products and have since received favorable preliminary countervailing and antidumping rulings.

We anticipate final rulings to be determined before the September. This uniquely positions us as we are the largest producer of nonautomotive coated flat rolled steel products in North America. Together with the announced Section two thirty two steel tariffs, these developments are expected to positively impact demand for lower carbon emission US produced steel. The underlying steel demand remains steady. However, customers continue to exercise caution in placing orders due to ongoing uncertainty related to trade policies and interest rates.

That said, we believe steel prices have stabilized in the near term with potential for upward movement in the future. Our Sinton, Texas flat roll mill achieved higher earnings in the second quarter despite operating a lower utilization rate of 71% due primarily to lack of sufficient oxygen supply caused by a vendor. We believe this impact to our operations could be as much as 55,000 tons. Sufficient oxygen, as Teresa mentioned, has been restored, and the bill is operating very well. The team continues to make improvements in yield, cost reduction, and quality.

They're also continuing towards additional product development to expand our current flat rolled steel capabilities. Meaningful progress is being made on API pipe grades, high strength grades, grade 100, one ten, pressure vessel quality, and OEM qualification packages for our automotive customers. We are seeing increased shipments from SIN's value added coating lines, which are strengthening the facility's product mix and boosting its through cycle earnings capabilities. Regarding the steel market environment, North American automotive production estimates for 2025 were recently revised modestly downward, reflecting ongoing uncertainty related to trade discussions. Fortunately, our specific automotive customer base has not only remained stable but have provided opportunities for growth.

We have become a supplier of choice for many U. S.-based European and Asian automotive producers due to our current and planned future superior carbon content capabilities. Additionally, numerous announcements have been made concerning its considerable volume of automotive production moving to The U. S. From foreign locations in the coming years.

Meanwhile, we continue to grow market share in both flat rolled and SBQ steels within the sector. Nonresidential construction remains stable despite broader predictions of a potential slowdown. So far this year, construction sector employment and spending have been stable. Pricing for most long products has generally improved, supported by strong backlogs. Looking ahead, ongoing onshoring activities, recently announced domestic manufacturing projects, and continued infrastructure spending are expected to further support fixed asset investment in construction related demand.

In the energy sector, oil and gas activity remains steady with encouraging signs of increased demand for both flat rolled and SBQ products heading into the third quarter. Additionally, solar is particularly strong currently as producers attempt to benefit from expiring incentives. Overall, we remain extremely optimistic concerning steel demand and the pricing dynamics for the domestic producers in the coming years based on the expected demand from new manufacturing and US produced steel content requirements. With that, I'll return us to Mark Millett.

Super. Thank you, mister Schneider. Appreciate that. Well, as you've seen these past years, I I believe it's it's more than evident that our performance driven team based culture in combination with a proven, diversified, and value add business model drives consistently superior financial metrics. This consistently strong performance continues to support our cash generation and growth investment strategies, allowing a balanced cash allocation strategy that has delivered high shareholder returns.

Our disciplined investment approach continues to support a strong and growing through cycle cash generation profile, while maintaining one of the highest return on invested capital amongst our peers. As mentioned, Sinton did face some oxygen supply challenges in the quarter, which have since been corrected and productivity has been reestablished here around about 80% and growing. The facility continues to improve operational reliability, enhance its downstream operations. Despite the hurdles, Sinton increased its EBITDA as we said, and we expect a meaningful positive shift in its financial performance for the remainder of the year. The four flat rolled steel coating lines are also continuing to increase volume and achieve high quality standards.

These types of high return investments are key to our value added product and supply chain differentiation strategies. Theresa already shared the exciting update for BioCarbon. This is an integral part of our sustainability program that is truly differentiating us in the eyes of our customers. And as I said, finally, are incredibly excited to be officially part of the Aluminium Flat Roll product supply chain. Investments are compelling and parallel our entry into the then antiquated steel industry over thirty years ago, and there are distinct similarities.

An industry with generally older inefficient assets at a considerable cost disadvantage and companies challenged to earn their cost of capital, thereby unable to reinvest in facilities and new technology due to lack of funds. So we believe we have a significant competitive position with aluminum. Unlike our entry into the oversupplied steel market, there is a significant domestic supply deficit of over 1,400,000 tonnes for aluminum sheet, and this deficit is forecasted to grow. In 2024, that deficit was supplied through high cost imports, which are now even higher cost as the tariffs increased from 10% in 2024 to the current 50% level. There is clear alignment with many of SDI's core competencies of construction and operational know how.

Our ability to build large, capital intensive assets has been proven once again at Columbus. It's a phenomenal facility. The customers are in awe. Our team did a great job. We have a deep experience operating melting, rolling and finishing facilities.

Our differentiating performance driven culture will drive higher efficiency and lower cost operations. There is also excellent commercial alignment. Two thirds of our carbon flat rolled steel customers consume and process aluminum flat rolled sheet. We will have both steel and aluminum product offerings as we gain market share in the automotive sector. And our new penetration into the countercyclical beverage can market sector is a new market for us.

We can take great advantage of our raw material platform to drive higher recycled content. As noted by Teresa earlier, we are the largest North American metals recycler, including aluminum, and we've developed new separation technologies, allowing us to have access to usable aluminum scrap at lower cost. Still confident in our earnings differentiation through cycle EBITDA of $650,000,000 to $700,000,000 plus 40,000,000 to $50,000,000 for Omni. As we discussed in the past, the four key areas of advantage are labor efficiency, higher recycled content, higher yield, excuse me, and optimized logistics. This strategic investment is a cost effective and high return growth opportunity, providing SDI with a new product offering and growth platform.

And obviously, the project is no longer just a vision, it's it's it's here. The customer base is excited to have a new market entrant that is known to be innovative, customer focused, and responsive to their needs. For us, business relationships are long term, founded on trust and the continuous goal of creating mutual value. As our aluminum growth has become a reality and our reputation permeates the industry, aluminum professionals with vast experience have joined us in this exciting project. They see the vision and are energized by our culture, where they realize they will be heard and can have an impact.

They have helped us build a phenomenal team that combines in-depth knowledge of aluminum flat roll steel aluminum operations, commercial markets, process technology and customer service, complementing our SDI professionals that bring our performance driven entrepreneurial culture. Conversations with existing and new customers remain robust as they need and desire new supply options. We have several automotive and beverage can producers that plan to aid us in the product development and rapid product certification as we ramp operations. In the interim, we will be selling a lot of industrial and can sheet products with the expectation to reach our optimized product mix sometime in 2027. '3 of our four melt cast houses are fully commissioned at Columbus and are producing all 3,000, 11,000 series ingots for industrial, can sheet and automotive sectors.

The hot mill and cold mill are in start up and are on schedule and have successfully produced 3,000 series industrial coils. The numerous downstream lines are also in various stages of commissioning and start up, all on schedule. Based on our current pace, we anticipate exiting 2025 at a utilization rate of between 40% to 50% and exit 2026 at a rate of 75% as product certifications occur. We expect to be at EBITDA breakeven to slightly positive before the 2025 and increasing thereafter as we continue to ramp and optimize our product mix. You have to be there, but there's a real sense of excitement across our company and the plan, driven by a passion to build on our legacy in steel and lead a transformation in the North American aluminum market.

We're impassioned by our current and future growth plans as they will continue to drive the high return growth momentum we have constantly demonstrated. The earnings growth of these new projects is compelling. The capital spending for Synton, the four value add lines and AluminaDanaX largely complete with a projected future through cycle EBITDA contribution from these projects alone of over $1,400,000,000 Field and Amps has grown to an incredibly resilient cash generating business of scale and diversification, driven by the best teams in the world. They will maximize opportunity as the industry continues to undergo a paradigm shift. Where we have a renewed focus on strategic mercantilist policies to ensure fair and sustainable competition, It's already evident by the recent positive trade determinations for coated flat roll, and obviously all the two thirty two tariff initiatives on steel and aluminum.

And importantly, the inclusion of tariffs on steel content and derivative products, particularly fabricated structural steel, which has plagued the domestic industry for years. We have risk mitigation to address supply chain dislocations as accelerated reshoring of manufacturing. AI and cloud computing will support the need for more nonresidential construction for data centers, chip factories, battery plants, along with growing fixed asset investment associated with public and private dollars. Decarbonization itself will materially steepen the global cost curve, providing Steel Dynamics with a meaningful competitive advantage to gain market share and increase margins. The evolving metals industry landscape provides an opportunity for us to further enhance our earnings potential.

As we have said before, we really are blessed, and our people are the foundation and fuel of our success. I want to personally thank each of them for their passion, commitment, and unwavering dedication. And we are committed to them, and I remind those listening today that safety for yourselves, your families, and to each other is our highest priority. I'd also be remiss not to express my gratitude to our loyal customers, many of whom have been with us since the beginning. These partnerships are built on mutual trust, keeping our word, and delivering innovative solutions that enhance their value.

Our new aluminum partners can expect the same level of commitment and collaboration. And to our suppliers and service providers, thank you. We value your continued support and the strong relationships we've built together. Our culture and business model continue to differentiate our performance, leading to best in class financial performance. And as a Circular Metals business, we're uniquely positioned to offer lower carbon supply chain solutions, enhancing sustainability while helping to mitigate cash flow volatility through all market cycles.

This positions us to deliver superior shareholder returns and create lasting value for us all. We look forward to creating even more new opportunities for everyone today and in the years ahead. And with that said, Holly, we would love to answer the questions of the group.

Thank signal by pressing the star key followed by the digit one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed star one earlier during today's call, please press star one again to ensure our equipment has captured your signal. Also, we ask that you please limit yourselves to one question to facilitate time for everyone. Any additional questions can be addressed upon reentering the queue.

One moment while we poll for questions. Your first question for today is from Carlos De Alba with Morgan Stanley.

Yes. Hello. Good morning. Just on the Ali business, congrats on producing and shipping the first coil. Just wanted to maybe get a little bit more color on what drove the slightly lower utilization rate in 2025 and 2026 and also the delta in the EBITDA profitability, which I think before it was said that in the second half of the year, will be EBITDA positive.

Maybe just the semantics and it's still the same message, but it felt that now I felt that EBITDA positive now is coming at the very back end of the year, whereas before maybe it was my expectation that it would be more earlier in the second half of the year?

Well, listen, I don't think there's any material change in our our view, to to be honest. I I guess 50% 40 to 50%, given that we're in a in a start up, I I think having a specific number is might might be problematic, but there there's no underlying change in our our thought process, our mill capability, or anything to to to to have that change, I guess.

EBITDA question? I didn't quite hear that.

No. Carlos, we still are confident that as we progress, we do believe that we're still gonna be EBITDA positive in the second half of the year. I guess we got a little more specific in our notes saying in the fourth quarter, but whether that's September, October, November, December, or, you know, October, November, I I'm not sure that there's a significant difference. So I think the takeaway should be that we still have full confidence in the aluminum operation. The team's doing an incredible job, and we weren't trying to message anything specifically otherwise.

Your next question for today is from Katja Chandsik with BMO Capital Markets.

Hi. Thank you for taking my question. Maybe on Sinton, can you disclose how much of EBITDA the mill generated in 2Q?

Katja, I'm sorry. We I think beginning at the end of or the beginning of this year, we're not specifically giving the financial metrics as it relates to Sinton.

Suffice it to say, it was significantly better than the first quarter. That said, there's still a step function increase that we're expecting in the second half of the year.

And when we do look at the second half of the year, is this the mill now at a point where it could generate closer to that 500,000,000 annualized rate, or are there any lingering issues still?

It's a good question, Katja. So, they're still not operating at that pace given that they need to continue with the product development.

As Barry mentioned, we're really excited because they're doing automotive grades now, API grades, and but we need to be able to get the facility with the proper mix of that value added opportunity, and that will take some time. So that will likely take through the second half of the year. So I would view 2026 as that opportunity for Syntin to be at the, what we say, through cycle run rate to your point of, you know, around $500,000,000.

Your next question for today is from Tristan Gresher with Exane BNP Paribas.

Yes. Hi. Thank you for taking my questions. Maybe just a follow-up on the aluminum venture, if you can discuss the market environment in which you'll be ramping up your new aluminum facility. I mean, it looks very different from what was the initial base case or initial market environment.

So from a trade, from a demand perspective, where do you see the new opportunities and also maybe the the risk associated?

Well, I I think the if if anything, the the environment has has become even more positive, obviously. The the the deficit is, supply deficit is is definitely there. That will continue to grow, and it's being supplied obviously by imports with a with a, with a huge tariff attached to it. So us come bringing bringing volume on in that environment is is a is very, very positive for us and then all honestly for for the customer base as well. So I don't think we we see any any issues there.

I I think conversations with our customers has been absolutely incredible. We've started to to bring, you know, the the larger folks, through through our mill. And I I I said it earlier that they are absolutely blown away by the facility and and the capabilities. And I think even, even more so, our our approach, you know, as we talk through supply arrangements and product capability, recognize that we truly do partner with the customer. And I think they're finding that refreshing.

So there's there's no no no blemishes, I I I guess. I I think, we're excited, if not more excited today than we ever have been.

And Tristan, to add to what Mark just described as a more positive environment, when we modeled and projected the $650,000,000 to $700,000,000 of through cycle EBITDA associated with our aluminum investments, the spreads that we actually used from a product set are more conservative than what we're seeing in the market environment today. So there is a lot of upside opportunity.

Alright. That's that's clear. And I was maybe referring to potential demand destruction, especially when it comes to can and beverage where we know prices elasticity is quite could be high. But I I guess from your conversation with customers, it it doesn't seem there is a risk there, if I understood correctly.

Again, talking to the the end consumers, not the can makers themselves, but they do not see that. There's a still an overwhelming desire from a societal and environmental perspective to to eliminate plastic bottles, and there is a clear desire from the can makers and and from the from the bottlers and from the Coca Colas, the Pepsi's, the beer the beer guys, they're they're all wanting aluminum right now.

Okay. And maybe just then a follow-up on on the tariff situation. I think you you discussed it already in q one, but wanted to see if there are any changes regarding your your exposure to pig iron. If if you could comment on how much do you source maybe from Brazil. And if I mean, I understand with the 10%, it was not a big deal, but if we get 50% on pig iron imports from Brazil starting August, what could you what could you do?

What could you put in place to mitigate those impact? And then I have a follow-up.

Yeah. Tristan, this is Barry Schneider. The the pig iron topic is one that we're watching closely. I I wanna make it clear that our long products mills do not use any iron substitutes or pig iron, so this is a flat rolled issue. In our three flat roll producing plants, our Butler facility has an iron producing facility where we use waste oxides and recycled iron content to generate our pig iron.

So the Butler Mill is largely independent of the merchant trade, which brings us to the products we do purchase. The tariff is concerning. Historically, the United States government has not looked at raw materials as something that would be tariffed going away back to the the founding of our country. The the 02/2001, the 03/2001, and the February previously did not tariff pig iron coming into the country. We maintain a supply chain that has been, under quite a bit of duress under the past five years.

Historically, pig iron was produced in Russia and Ukraine. Since Russia launched the war against Ukraine, those materials have been severely reduced. We still maintain a relationship with Ukrainian producers. To the extent that they can supply, we're happy to buy from them, but we have shifted a lot of our production to Brazil. So as we look at the the tariff landscape, we balance our metallic spreads.

One of the things we talk about a lot is being able to get more value out of the scrap recycled supply chain. It's one of the powerful benefits of having iron, of having Omni as a captive scrap supplier to us that we can bring in the highest quality materials and continuously balance based on cost, productivity, and quality. So we'll manage as we always do. There are alternatives we can explore, and we'll continue to, work with the government in, in hope that there is some kind of relief when it comes to raw materials in the tariff strategy. So to that point, the specifics are are always changing based on the various cost inputs.

It's literally a model our people can work every day depending on what what scrap assets and iron assets they have at their disposal. So we continue to look at it as a a challenge for us to thrive in. Our culture has developed a good competency, and we attack it every day.

Alright. That's, that's very clear. And if you allow me a last one, just the big pictures on tariffs, on section two thirty two tariffs and do you think this time is different versus 02/2018? Are you confident we won't see a dilution in the tariffs and that those sectoral tariffs are gonna stay? And I'm talking about steel, but also, obviously, now aluminum.

Well, I this is Mark. I I I don't see well, I I I would say the the the situation will there's no doubt, though, it will change. But we do believe that tariffs will be a mainstay of the trade agreements going forward. I think the, you know, when you look at the first time of the administration, the renegotiation of NAFTA into the USMCA was a was an incredible advance on on that that that relationship between Canada, Mexico, and ourselves. You know, the the increased domestic content and and and other things in that really, really has helped The US, but even more importantly, North America as a whole.

The USMCA is up for renegotiation again in 2026. And it's our belief that the tariff discussions and the trade policy discussions that have gone on between the three countries are a prelude to that. But we are confident that that will get renegotiated into an even better, solution for for the for The US, principally in preventing the so having poured and melted language in in the the supply agreement such that it will prevent the the leakage of Chinese and Asian and other unfairly trade traded commodities coming through Canada and coming through Mexico in into The States. So I I think, net net, I I I don't believe you you'll see these the the levels as is today, but I I think it's all gonna lead to a much better better trade environment going going forward for the long term.

Your next question for today is from Phil Gibbs with KeyBanc.

Hey, good morning. Good morning. Can you explain the benefit of biocarbon and the potential ability to replace other materials? I think I just wanted a better understanding of what it brings to the table.

Good morning, Phil. So yes, so what we initially intended Biocarbon for is that it will allow us to replace a large portion, the first facility, not the entirety of our anthracite usage as carbon inputs for our steelmaking. So we'll be sending this to our own steel mills so that we can actually reduce the carbon footprint by as much as 35%. But there's also attributes related to the process where, we produce some hydrogen as well. So it's pretty unique.

There'll be more to come as we start to ramp up the facility. It's very modular based, so we can grow it. And what that could likely help us do in the long term is a couple of things. One, we've talked about in the past is and we talked about pig iron for a a bit already on the call this morning. And if we had, additional supply of bicarbon, we could potentially have, our own supply of pig iron in The US, and it would be considered, I'm gonna use the terminology, green, but would be low carbon.

So there's kind of a a long investment thesis related to the biocarbon product for us. But it also we found with certain of our OEM customers, it's not something that we'll get into this morning, but they feel like there's a unique opportunity for different credits to a newer to them as well from a carbon perspective where it would really be a superior product that we could certify to in the flat rolled steel arena. So there's there's more to come for bicarbon. Just let us get started this quarter, and and we'll keep talking about it.

And, Philip, thank you. That. Go ahead, Mark.

Yeah. Just to add to that, I I think you you need to look at it in a in the broader sense of of our whole sort of sustainability, strategy and and the path to to carbon neutrality. There there's absolutely no doubt that there's there's no dilution of of focus, particularly from the the European, automakers. And as Barry said And as Barry said the domestic auto, sector has has suffered a little bit. Our mainstay or main volume is actually flowing through Mercedes and BMW and VW and a little bit maybe through Volvo, but nonetheless, we're very focused on the European supply. They have not taken their foot off the accelerator relative to carbon footprint and to sustainability. And I think if you look at the penetration that our team has achieved in auto is squarely driven by our sustainability position. And we're leveraging the fact that we already are or already have the lowest carbon footprint mills in the world today.

And that's not us saying that, that's European manufacturers saying it. So it is totally differentiating us in the marketplace. And I think just the the award from VW for sustainability here that the Baryon Volkswagen, you know, went over to Europe to to to pick up. I mean, was incredible.

Thanks, Mark and Theresa. And then as a follow-up, in terms of expectations for Synta in the third quarter, is there expected to be sequential profit improvement? If there is, what drives it? And then also, what can we define as the dollar headwind associated with that lost production in the second quarter at Sinton? Thank you.

Phil, again, know that everyone's interested in the profitability of specifically. I would say what we believe will drive the significant increase in third and then fourth quarter earnings from will be, one, volume volume volume volume. So we do believe that we're going to have higher volume but also higher value added product mix, which is key to the profitability at Sutton. And we won't have had the curtailment of the oxygen, and we also had a maintenance outage in April. So there are some key things, high level that we have confidence in that will drive that increased profitability.

And, Theresa, I'd like to add to that. The, the value added lines, having two galvanizing facilities down there now and two paint lines, the cost of quality of starting those facilities up, they're they're expensive products to make. So as we ramp up and get more yielded product to the to the marketplace, that that really significantly reduces the loss cost as of the loss cost in making high quality. So we're very excited about where the teams are getting with the the yields and the percent prime that they ship to marketplace. We're also very excited about the antidumping countervailing duties because the when you really look at the the inventories that that surged ahead of the ADCBD rulings, We've been competing with a lot of warehouse material that came from 10 different countries into into our country, and those those inventories remain and are slowly being worked out.

The promise of having a actual final rulings here by September helps substantiate that the the markets will return to more normal, profit contributions. So we're excited about that cost of quality. It was ambitious putting two lines in at once, but we're we're starting to benefit from the, the team just really becoming professional painters and and, coders. So, we're excited about that that future position because of the the improvements the team makes every day.

Thanks for all that added, color there, everyone. Appreciate it. Good luck.

Your next question is from Alex Hacking with Citi.

Yes. Thanks. You mentioned that you expect fab to see an inflection point. Is that being driven by price or volume or both? Thanks.

Alex, the primary driver of the inflection point for fabrication coming up here in the third quarter is volume, but there's also stability in the price, which is very supportive.

Steel Dynamics Q2 2025 Earnings Call Transcript | Fortune

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Steel Dynamics (STLD) Q2 2025 Earnings Call Transcript

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