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F500-2021-319-Steel Dynamics

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Founded in 1993, Steel Dynamics, Inc. is a steel producer and metals recycler that operates across four segments—steel production, recycling, fabrication, and aluminum—with facilities in the U.S. and Mexico.

Q2 2026

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Steel Dynamics (STLD): Company Profile, Stock Price, News, Rankings

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Steel Dynamics

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Good day, welcome to the Steel Dynamics second quarter 2026 earnings conference call. At this time, all participants are on 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, July 21st, 2026, and your participation implies consent to our recording of this call. If you do not agree to these terms, please disconnect. At this time, I'd like to turn the conference over to David Lipschitz, Director of Investor Relations. Please go ahead.

Thank you, Matthew. Good morning, and welcome to Steel Dynamics' second quarter 2026 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, Theresa Wagler, 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 risk and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metals recycling, fabrication, and aluminum businesses, as well as to general business and economic conditions. Examples of these are described in the related press release, as well as in our annually filed SEC Form 10-K under the headings Forward-Looking Statement and Risk Factors found on the internet at www.sec.gov and, if applicable, in any later SEC Form 10-Q. You will 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 2026 Results. Now I'm pleased to turn the call over to Mark.

Super. Thank you, David. Good morning, everyone. Thanks for joining us this morning for our second quarter 2026 earnings call. As reported, our teams achieved a strong second quarter financial and operational performance. The quarter highlights included record quarterly steel shipments of 3.7 million tons, adjusted EBITDA of $921 million, and we achieved meaningful milestones across our aluminum and Sinton platforms. It's exciting to watch our long-term vision translate into operational success, customer partnerships, and growing value creation. We have an amazing team of people that achieve best-in-class performances each and every day, and I'm just simply honored to be one of them. Sadly, one of our new team members, Elijah Jones from New Process Steel, was fatally injured in an accident that occurred while work was being performed on equipment this past April.

It's gut-wrenching for everyone to experience such an event, and our prayers and thoughts continue to be with Elijah's family, friends, and teammates. We often say safety is our most important cultural pillar and value. Our world-class safety culture continues to evolve, and our team's unwavering dedication to our take controller safety philosophy must continue to strengthen even further. I'm continually inspired by the commitment of our team members demonstrating towards one another. They operate as a family, supporting each other while challenging the status quo and striving for continuous improvement every day. We are resolute and committed to achieving a zero-incident environment and will not be satisfied until that becomes a reality. Before I continue, I'd like Theresa and Barry to both add color to the quarter's results. Theresa?

Thank you, Mark. Good morning, everyone. Thank you for joining us this morning. For the second quarter of 2026, our net income was $534 million, or $3.69 per diluted share, with adjusted EBITDA of $921 million. Second quarter 2026 revenues were $6.1 billion, and operating income was $700 million, higher than sequential first quarter results, driven by higher realized steel pricing and record steel shipments. Our steel operations generated operating income of $721 million in the second quarter, a 30% sequential increase as average selling prices per ton increased $105. Value-added spreads to hot band have also improved $70 per ton from the lows experienced in the fourth quarter of 2025. As the largest flat-rolled steel coater in North America, this will be especially beneficial moving forward.

As a reminder, approximately 80% or more of our flat-rolled steel business is linked to lagging price contracts, in aggregate, generally lagging two months. The more recent flat-rolled steel price increases and further improved value-added product spreads will positively impact our third quarter results. Additionally, demand and related pricing for our long product steel group is especially strong, with demand and pricing continuing an upward trend. Second quarter 2026 operating income from our metals recycling platform was $48 million, in line with sequential earnings as increased shipments offset lower steel metal spread. Scrap flows also remain seasonally strong with ample supply. Our steel fabrication team achieved second quarter operating income of $85 million, aligned with first quarter results of $90 million as increased volume and steady pricing were offset by higher steel raw material input costs.

Our fabrication business generally maintains between 10-12 weeks of steel inventory, which can tighten margins in a rising steel price environment. Our steel joist and deck business is experiencing strong demand and order activity. As a result, our order backlog is 45% higher now when compared to this time last year. We are also seeing increasingly constructive price discussions. This trend reflects improving market fundamentals and healthy demand conditions. The aluminum team's execution is amazing. Mark will provide the details later on the call. As for the financial impact, second quarter 2026 operating losses associated with the continued startup and commissioning of our aluminum operations were $33 million, a 48% improvement over sequential results. There was also an additional non-cash impairment charge of $16 million related to the relocation of our second planned recycled slab center.

Aluminum flat-rolled sheet shipments increased to 53,000 metric tons in the quarter from 22,500 metric tons achieved in the first quarter of this year. We expect volumes and profitability from the aluminum rolling mill to increase sharply in the second half of 2026 and into 2027 as the third cold mill is brought online in the third quarter, as startup costs subside, utilization and yields improve, and scrap content increases. In the second quarter, we generated cash flow from operations of $428 million. Cash was reduced by $225 million due to working capital growth that was primarily associated with increased customer account values as product pricing improved throughout our businesses and aluminum flat-rolled sheet sales continue to climb. Our cash generation is supported by our differentiated circular business model and highly variable low-cost structure.

At the end of the quarter, we had liquidity of $2 billion, comprised of cash and investments of $800 million and our fully available unsecured revolver of $1.2 billion. During the second quarter, we invested $124 million in capital investments and invested $262 million year to date. We believe the second half of 2026 capital investments will be in the range of between $300 million and $350 million. In the first half of 2026, we increased our cash dividend and we repurchased $350 million of our common stock, with $489 million remaining authorized for share repurchases at the end of June. These actions reflect the strength of our capital foundation and cash flow generation capability and the continued confidence we have in our future. Our capital allocation strategy prioritizes high-return growth opportunities while maintaining a disciplined and balanced approach to shareholder value creation.

Shareholder returns are anchored by a sustainable and growing base dividend, complemented by a flexible share repurchase program that allows us to return additional capital to shareholders when appropriate. At the same time, we remain committed to preserving our investment-grade credit profile, ensuring the financial strength and flexibility needed to support strategic growth initiatives, navigate market cycles, and create long-term value for our shareholders. Our free cash flow profile has fundamentally changed over the last five years, from an annual average of $540 million between 2011 and 2015 to $2.4 billion for the most recent five-year period. There's more to come. Over the past several years, we have invested more than $5 billion in three transformative organic growth initiatives: our Sinton steel mill, value-added coated lines, and aluminum flat roll products platform.

These investments reflect our disciplined approach to capital allocation and our commitment to growing in markets where we believe we can create sustainable competitive advantages. These assets continue to ramp and mature, we expect them to generate meaningful earnings and related cash flow. Collectively, these projects are estimated to provide over $1.4 billion of through-cycle annual EBITDA capability, representing a significant opportunity to enhance our future growth, profitability, and shareholder returns. We've established a strong and sustainable capital foundation that enables us to invest in meaningful strategic growth opportunities, consistently return capital to shareholders, and maintain the investment-grade financial metrics that underpin our long-term success. Barry?

Thank you, Theresa. Our steel fabrication operations performed well, delivering solid earnings, as increased demand and steady realized pricing helped offset higher steel input costs. Order activity has been stronger than we have seen in a number of years. The increased demand has been led by several large markets, reducing the risk that any single sector derails the overall positive trajectory. The Dodge Momentum Index, which generally leads construction spending by a 12-18 month window, increased to its highest recent level, up more than 30% year-over-year. The increase was driven by commercial planning, accelerating institutional activity led by healthcare. The long-range project pipeline appears robust. Supporting that idea, contractor project backlogs also stood at over nine months in May, which is near the highest level in several years. Our steel fabrication order backlog was up over 45% compared to this time last year.

We are also beginning to see improved pricing. We continue to have high expectations for the business this year due to positive customer sentiment, quoting activity, continued manufacturing onshoring, and public funding for infrastructure and other fixed asset investment programs. The uplift from this macro environment could be considerable. Our steel fabrication platform provides meaningful support for our steel mills, particularly critical in softer demand environments, allowing us to operate at higher through-cycle utilization rates than our peers. This also helps mitigate the financial risks associated with lower steel prices. Our metals recycling operations performed well during the quarter, benefiting from increased scrap availability and higher shipments as improved weather conditions supported stronger seasonal collection activity. We currently expect scrap pricing to stay relatively steady in the coming months.

The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for both our steel mills and our scrap-generating customers. In particular, our Mexican operations strengthen the raw material positions of our Columbus and Sinton facilities. They also provide strategic support for aluminum scrap procurement for our flat rolled aluminum investments. Our metals recycling team is partnering even more closely with our steel and aluminum teams to expand scrap separation capabilities through enhanced processes and technology. This will help mitigate potential prime ferrous scrap supply challenges over time and provide a meaningful advantage in increased recycled content in our aluminum flat roll products while also expanding our earnings opportunities. The steel team delivered a solid quarter with record shipments of 3.7 million tons.

During the second quarter of 2026, the domestic steel industry operated at an estimated production utilization rate of 81%, while our steel mills operated at 90%. We consistently achieve higher utilization due to our value-added product diversification, differentiated customer supply chain solutions, and the support of our internal manufacturing businesses. This higher through-cycle utilization is a key competitive advantage supporting our strong and growing cash generation and best-in-class financial metrics. Regarding flat rolled steel markets, conditions are strong as solid demand and lean inventory levels support a tight market environment. Lead times are elevated and customers continue to express optimism. Within flat rolled steel, we're also seeing continued improvement in value-added pricing spreads, which have returned to more normalized levels, benefiting from the impact of the core trade cases successfully resolved last year. Long product steel markets are also strong, driven by strength in non-residential construction.

We believe this strength will continue, especially within structural steel and railroad products. Special bar quality markets are also improving across multiple sectors, including industrial, manufacturing, and energy-related markets. Regarding the steel market environment, North American automotive production forecasts for 2026 are to remain in line with prior year. Despite a generally stable production environment, our specific automotive customer base continues to present us opportunities. We have strengthened our position as a supplier of choice for many U.S.-based European and Asian automotive producers, driven in part by our lower carbon content steel offerings and differentiated value-added product capabilities. I already mentioned the strength of the non-residential construction market related to steel fabrication. This holds true for long product steel as well. Our platforms continue to benefit from ongoing reshoring trends and domestic manufacturing investments, which are supporting sustained demand across our end markets.

In the energy sector, oil and gas activity remains strong, with pipe manufacturers already looking into 2027 projects. Demand for the solar market also continues to be very robust. Additionally, we are seeing improved demand from the agricultural sector, although residential construction activity remains relatively subdued. We remain optimistic about demand for our diversified portfolio of value-added steel products and believe our end-market exposure positions us well. Regarding trade policy, we believe in preserving a strong, durable trade framework that provides operational viability for U.S. steel producers by disallowing unfairly traded foreign products. The current administration has based a 50% Section 232 tariff for imported steel on national security matters, fully supporting the industry long term. We are also actively engaged with the USTR regarding the USMCA review to ensure there are no weakening regarding our protections, including melted and poured provisions.

The administration has launched new Section 301 investigations targeting countries that both flood the market with excess steel and rely on forced labor in its production. We are specifically advocating for these remedies to be additive to the existing 232 steel tariffs. We are advancing legislative and regulatory priorities to create meaningful demand for our steel, particularly through investments in infrastructure, shipbuilding, and the power sector. On the demand side, we are working closely with Congress to strengthen Buy American steel requirements in the SHIPS for America Act and the Federal Highway bill, turning large public spending vehicles into volume opportunities for our steel businesses. Now back to you, Mark.

Thank you, Barry. Thank you, Theresa. All well said. Consistently achieving such positive results year upon year doesn't just happen. It reflects the dedication of our teams and the effective strategies we have developed and executed over time. We have invested strategically to successfully achieve significant scale, high margin product to market diversification, efficient and unique customer supply chains, and synergistic operating platforms to optimize market opportunities throughout economic cycles. When combined with our performance-driven compensation culture, these strategies enable us to consistently achieve at the highest levels and outperform competitors across all market cycles. Our foundational focus on market and product diversification, particularly in higher margin value-added products, supports stronger through-cycle facility utilization and drives superior financial performance.

We optimize cash generation, which enables a balanced and consistent capital allocation strategy that supports growth, maintains financial strength, and delivers compelling long-term returns to our shareholders. Our disciplined approach to capital investment continues to generate strong through-cycle cash flow and supports one of the highest return on invested capital profiles in the industrial sector. The most recent and most significant current investment is in aluminum flat roll products. As I mentioned in the last call, the excitement and the pride of the aluminum team is absolutely incredible. It is inspiring to watch them transition from construction and commissioning into full-scale production, serving customers with the high-quality products they expect from Steel Dynamics. The team has outperformed all expectations, constructing and commissioning an incredible facility in industry-leading time.

Competitors and customers alike that have toured the mill were amazed at the quality and the capability of the plant and the speed of product qualification. The team is navigating a volatile aluminum market driven by the impacts of geopolitical conflict and domestic supply chain challenges. Despite these near-term challenges, they've remained focused on execution, customer service, and operational excellence. Beyond these temporary constraints, though, we are operating in a unique and highly favorable long-term market environment. The United States faces a significant structural supply deficit of more than 1.4 million metric tons of aluminum sheet, that shortfall is forecast to widen as demand continues to grow across key end markets. Combined with appropriate tariffs on imported aluminum products, this supply imbalance is further strengthening the value proposition for domestic producers.

We believe our aluminum platform is exceptionally well-positioned to capitalize on the growing domestic demand, creating substantial long-term value for our shareholders. This investment is in clear alignment with our core competencies. Our construction capabilities have once again been proven. Both Columbus and the [cast house] at [Saint Marie, Louisiana], are state-of-the-art facilities built cost-effectively and in record time. We're using our deep operational know-how in combination with the technical expertise of aluminum industry experts. Our proven incentive-driven performance culture will drive higher efficiency and lower cost operations compared to the competitors. We also believe we have an advantaged commercial position. Two-thirds of our existing carbon flat rolled steel customers also consume and process aluminum flat rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality.

The beverage can market will provide countercyclical market diversification, the more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation. Our metals recycling platform will facilitate higher recycled content. We're the largest North American metals recycler, which includes aluminum. Our knowledgeable teams have developed new separation technologies, amplifying the supply chain value while providing greater access to usable aluminum scrap. Production to date is confirming our expected cost differentiation. When operating at our nameplate capacity and expected product mix, through cycle EBITDA expectation for normalized market conditions remains at $650 million-$700 million, plus another $40 million-$50 million for our metals recycling platform. Operating experience today, albeit in ramp-up, is verifying the five key competitive cost advantages: labor efficiency, higher recycled content, higher yields, optimized logistics, all driven by a performance-based operating culture utilizing state-of-the-art equipment.

This strategic investment is cost-effective and a high return growth opportunity, providing Steel Dynamics with additional countercyclical diversification, while further stabilizing and growing our cash generation capabilities. The customer base is proving to be eager for a new market entrant, one that is known to be innovative, customer-focused, and responsive. We review business relationships as long term, founded on trust, with a continuous goal of creating mutual value. Not just simply financial value, but we will provide new supply chain solutions, new products with preferred quality and service. With that said, every startup and ramp-up brings its share of challenges, and I'd like to sincerely thank our customers for their patience and partnership as we continue to fine-tune our operations and optimize performance. Their trust and their support have been invaluable, and we remain focused on delivering the highest quality products, reliability, and the service they deserve.

The hot side is fully operational, with the ability to run at rated capacity. Two of the three cold mills continue to increase production, while the third and final cold mill started this month. This will allow us to have the full 650,000 metric ton annual capability. The first of two automotive Continuous Annealing and Solution Heat treating lines is fully operational. We achieved finished product qualification status at multiple automotive manufacturers for 5182 and 5754 products, and we are currently in trials for 6000 series alloys. I think you would agree, it's an absolutely phenomenal achievement when you consider the mill has only been running for a little around 12 months. The second CASH line is expected to start commissioning in the fourth quarter of this year. The team is incredibly excited with the earlier-than-anticipated product certifications.

It's a testament to the incredible talent we have been able to embed in the team and the technical capabilities of the mill. There's great energy and great momentum as we move through production, commissioning, and ramping of the various production units. We're encouraged by our progress, with expectations for significant cost and product mix optimization benefits to occur in the near term. We believe volume operations will increase sharply in the second half of 2026 and continue improving through 2027 as startup costs subside, utilization and yields improve, and scrap content increases. The aluminum flat roll mill itself produced 84,000 metric tons in the second quarter, which is approximately 50% of capability, with expectations to exit 2026 at a monthly production rate of at least 90% capacity, allowing for full volume capability in 2027.

We remain highly enthusiastic about our current and future growth initiatives, which we believe will continue to drive the high return growth momentum we have consistently demonstrated. This through-cycle earnings potential of over $1.4 billion from our recent growth projects is becoming a reality. Capital funding is substantially complete, and operational optimization is our focus for both our recent flat rolled steel and aluminum investments. I'm encouraged by the growing recognition among our teams, our customers, and investors of the strength and consistency of our cash generation, coupled with our disciplined high return approach to capital allocation. We believe the steel industry has undergone a fundamental paradigm shift in recent years, supported by an increasingly mercantilist global trade environment. This will help maintain a more level playing field through continued and appropriate trade enforcement mechanisms, as Barry described already.

We expect continued growth in fixed asset investment, which remains a key driver of demand for metal products. New and reshoring of manufacturing continues to gain momentum, and together with growing fixed asset investment, will continue to support non-residential construction activity. As decarbonization initiatives accelerate, the resulting increase in cost structures across the world will materially steepen the global cost curve, enhancing Steel Dynamics' competitive position and driving opportunities for market share gains and expanded metal spreads. Our highly diversified value-added product capabilities provide a distinct competitive advantage, allowing us to leverage the evolving metals market environment and amplify our relative earnings power. In closing, as I've said many times before, our people are our foundation. I thank each of them for their passion, their dedication, and commitment to our success. As they are committed to us, we are also committed to them.

I remind each teammate listening today, nothing is more important than safety for you, your families, and one another. Please keep Elijah's family, friends, and teammates in your prayers and resolve to work even smarter and harder to achieve an incident-free workplace. I also thank our loyal customers. As I said previously, our partnerships are built on trust, delivering on our commitments, and collaborating to create innovative solutions and value. And finally, I thank our suppliers and service providers. Your partnership, trust, and support are essential to what we do each and every day and to our continued success. So together as a team, we look forward to creating new opportunities and shared success today and the years ahead. With that said, Matthew, would love to answer questions.

Thank you. If you'd like to ask a question, please 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 yourself to one question and one follow-up to facilitate time for everyone. Any additional questions can be addressed upon reentering the queue. Your first question's coming from Lawson Winder from Bank of America. Your line is live. And once again, Lawson, your line is live.

Yeah. Hi. Thank you, operator. This is Satish on for Lawson. Good morning, Mark, Theresa, and Barry.

My first question is on the steel fabrication operations. You mentioned that the ordering activity is strong, the backlogs are 45% higher year-on-year, the pricing is beginning to improve. The pricing realized for Q2 was a bit lower than Q1. How should we think about the pricing or the margin outlook for the second half of 2026?

Satish, thanks for the question. As it relates to the pricing, the pricing that's going into the backlog right now is at improved levels, that doesn't necessarily mean that that's realized in the second half of this year. Some of those projects are in the fourth quarter and actually being placed into 2027. You'll continue to see pricing, I think, remain pretty stable as far as from a realized pricing perspective. The increases you should expect to see probably in the next six to nine months from a pricing perspective. Barry's nodding, so that means I got it right. Yeah. You also just take into consideration what we're seeing in the steel side of the equation for steel input costs.

That said, volume is expected to be really strong for the second half of this year and into next year for fabrication, volume helps offset some of that.

Thank you. Of that 40% higher backlogs, is there any way you can share how much of it is volume versus pricing?

Satish, you cut out a little bit. You said for the 45% increase in order activity, what was the question? I'm sorry. You broke up.

How much is related to pricing versus volumes?

The 45% increase is volume specific. It's not pricing specific.

Thank you. Your next question is coming from Nick Cash from Goldman Sachs. Your line is live.

Hi, team. Good morning, and thank you for taking the question. Just a question on aluminum, on the shipments of 53,000 tons this quarter. I guess my first question is, what was the mix on that? I think in 1Q, you mentioned it could potentially shifting to a little higher on the BevCan side.

Yeah. The preeminent increase was can sheet. We're also finishing up automotive hot band shipments, and some industrial.

Just to follow up on that, you mentioned on the call today, in 2H 2026 or the remainder of this year, as scrap content increases, it's going to help drive profitability. Are you guys currently not operating at, I guess, your most optimal scrap mix with what you're producing? On the back of that, I guess, what's the interplay with the scrap mix as you move into some automotive shipments in the end of the year, which I believe, and correct me if I'm wrong, requires a little bit more prime metals?

Yeah. You got to remember, we're commissioning and ramping up and starting up. There's no way, even though I wish it would be this way, that we'd be optimal in anything we do in all honesty. Although the team is doing a phenomenal job for where they are at this moment in time. We are using probably in the order of about 80% scrap for our can sheet, give or take a little bit. That will continue to grow. Automotive, I believe we're probably sort of 40/60 P1020 in scrap at this moment.

That's very helpful. Thank you so much. I'll pass it on.

Thank you. Your next question's coming from Carlos de Alba from Morgan Stanley. Your line is live.

Yeah, thank you. Good morning, Theresa, Mark, and Barry. On the aluminum, remaining on the aluminum business. Beyond the impairment, the $16 million impairment, is there any impact on CapEx operating cost and ramp-up schedule? Or maybe already the ramp-up schedule is going to be delayed, but of moving the location of your aluminum cast house in the U.S.?

I would say operationally, only incremental. The logistics of bringing the because we'll still be sourcing UBCs from the West Coast, although it'll only be about 60%-70%, as opposed to the 100% that would've gone in the mill. That's just incremental cost. OpEx would be the same. Again, we took the $16 million write-down for Benson costs, and the CapEx at Columbus is going to rise, I think, in the order of $10 million-$20 million. That's, in all honesty, more to do with just inflation of construction contractors more than anything else.

The move is not significant. As you point out, obviously, the ramp is delayed for internal supply.

Mark, when do you expect to maybe this second cast house to be at 100% utilization or the ramp-up schedule?

All right. Great. Thank you. If I may, very quickly, Theresa, any comments on working capital? EBITDA came ahead of expectations, but obviously working capital was higher because of pricing primarily. How do you see working capital in the third and second half of the year, third quarter, and second half of the year?

Yeah, no, it's a fair question. Working capital really did increase in the second quarter more than we anticipated, but that was based on company-wide increases in pricing across all the operations, which is good because the customer accounts remain very strong. That's eventual cash flow. We see that working capital should be a funding to, certainly neutral, but I would suggest a funding source in the second half of the year.

Thank you. Your next question's coming from Martin Englert from Seaport Research Partners. Your line is live.

Kind of a follow-up question on moving the slab facility, but related to the rolling mill in Columbus. If there was some greater upstream slab capability at the Columbus location or elsewhere, what's the maximum capacity of the rolling asset if there were no slab constraints upstream?

It's 650. The rolling mill, it has a maximum capacity of 650,000 metric tons per year.

Okay. There's no constraints upstream. If you add additional slab casters or something, you won't get more capacity out of it, correct?

Yes I would stress the 650 is nameplate, and our teams always seem to be able to squeeze a little bit more out of it, but that's not going to be seen for two or three or four years.

Okay. Understood. If I could one follow-up, if you could just explain the difference for aluminum products between the CASH line product that you're working on for automotive applications and a CALP line product, and if there's any asset crossover there. Does adding something like a surface treatment line allow you to produce CALP in the future, or is it more nuanced than that?

I can't give you the nuances of the differences in technology, in all honesty. You said CASH line and-

CALP line. Continuous annealing line with pretreatment. It tends to lean, I think, towards more exposed automotive.

The CASH line that we have, the pretreatment and everything is fully capable of exposed automotive. I do believe. In fact, I'm pretty damn sure. Because it's already been shipped and qualified by a couple of automotive guys over in the States.

Thank you. Your next question's coming from Timna Tanners from Wells Fargo. Your line is live.

I wanted to ask about the broader aluminum guidance still at $650 million-$700 million through cycle profitability. Just wondering, of course, in light of the higher aluminum futures market from when you first announced the project, in light of the pretty sticky, lower cost for scrap, what does it take to start thinking about a different forecast there?

Timna, it's a great question. We are fully focused on the job at hand, and that's just executing and getting things up and running. I would say there's absolutely no doubt, as I said, even though we're in ramp-up, we can see that the plans clearly demonstrate the $650 million-$700 million in a normalized environment. If today's environment remains, then obviously, yeah, there'll be some upside, but we're not contemplating that or not calculated that.

Well, actually, Timna, you and I have spoken about it, and we've spoken about it at the conferences. The full intent is to allow the teams to get the cost structures aligned, get to using more scrap content, et cetera, all the things that Mark mentioned, which we think will take through the third quarter, because remember, we're just getting the third cold mill up and running in July, August timeframe. The last CASH line will be fourth quarter. We want to make sure that we actually have everything dialed in before we start to talk about numbers that are higher than what we've suggested in the past. You're not wrong in the fact that the spreads available today are considerably higher than what we would have included in our $650 million-$700 million.

In time here, in the shorter term rather than longer term, we will address it.

Okay. That's helpful. Thanks. One follow-up, if I could, on aluminum. Of course, there's been a lot of attention recently on some incentives to focus on primary aluminum capacity built in the U.S. In a way, you're also adding aluminum capacity through producing slab from scrap, right? Is there not any discussion with the administration of also incentivizing or supporting this alternative source of aluminum that is also adding to our national security of aluminum in this country?

I would say yes, that there are discussions. Going back to your point, Timna, the smelting, the primary aluminum that they're producing is just that. It's primary aluminum. I don't believe they intend to put in any ingot casting initially. It's not actually affecting the ingot market.

Thank you. Your next question's coming from Katja Jancic from BMO Capital Markets. Your line is live.

Hi. Thank you for taking my questions. Mark, earlier you mentioned that the aluminum mill was operating at about 50% utilization rate during 2Q. Can you talk a bit about how the utilization rate progressed throughout the quarter?

It was kind of sequential. It just ramped up month-over-month.

What was the exit rate utilization? Could you provide that?

Katja, it was significantly higher in the June timeframe. We averaged 50% for the quarter. It was probably closer to maybe that 60%. Again, the team feels super good about that given the fact that we started up about nine months ago, and the fact that we're actually now producing automotive quality, can sheet quality, and we're ramping up pretty quickly. I think what you should expect to see is in the second half of the year, that ramp is forecast to accelerate pretty dramatically as we get the third cold mill, because we need that cold mill to reach the optimal capability of the rolling mill itself. More to come, but we think it should be a much steeper ramp in the second half of the year.

Okay. I fully recognize that this is still early, but can you remind us how we should think about CapEx next year, or what a reasonable range could be?

We're doing our longer term capital planning, Katja, in the next month or so. Absent any significant additional items, I would think that we'd probably be in the range of that $500 million-$600 million at maximum. Our sustained capital really is only around $250 million-$300 million. If it was that amount, we would have some growth capital embedded in that as well. We're really not talking about 2027 yet in much granularity.

Thank you. Your next question is coming from Tristan Gresser from BNP Paribas. Your line is live.

Yes. Hi, thank you for taking my questions. It's on the steel division. Your ASP went up quite a lot in Q2. Scrap prices were relatively steady, but your EBITDA per ton, I think is only up $60 a ton, which is already pretty great. What sort of other cost increase have you seen in the quarter, and how should we think about Q3 from a cost perspective?

Tristan, I would say, as Theresa mentioned, our contracts have a lagging nature to them. Most of those are turning over into the higher pricing that we've seen through Q2. We look forward to pricing increasing. We do believe scrap will go sideways. As far as other cost structures, we haven't seen significant impacts on any of our cost streams. We manage all those for the long haul. Right now, we're really concentrating on making sure we're on time for our customers and running at high utilization rates.

The teams had some maintenance outages at our three flat roll mills, but those are normal course, but would have increased cost a little bit, Barry, is that-

Yeah, in Q2, we led with all the mills having an outage which is somewhat unusual, but it was the right time to take care of the stuff. Some of the costs were embedded in what you saw as the COGS in the Q2.

Okay, that's clear. On the Steel Division, I think for fabrication, you talk about a pretty strong H2 outlook from a volume perspective. How should we think about your H2 outlook for the Steel Division?

The steel plants are all running with excellent backlogs right now. We are enjoying strength in all of the markets we participate in. Now that the spreads between the galvanized and the paint have resumed to somewhat normal, we're very bullish on what our coating facilities can do for us. Our customers are all anxious to keep good business going. We remain really optimistic of where the steel plants are, and that's across the divisions, long products, flat, all of our market segments.

Correct me if I'm wrong, Barry, but just to calibrate that spread, I think we began the year, it was like $100.

A little less than $100 between galvanized and hot rolled coils.

Steel Dynamics (STLD) Q2 2026 Earnings Call Transcript

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