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SEC filingSteel Dynamics record Q1 steel shipments drove a 96% operating income surge, led by steel and metals recycling spread expansion.
For the first quarter of 2026, Steel Dynamics reported consolidated net sales of $5.20 billion, a 19% increase from $4.37 billion in the prior-year period. Consolidated operating income surged 96% to $538.0 million from $275.1 million, driven by significant metal spread expansion in both the steel and metals recycling segments. Net income attributable to Steel Dynamics, Inc. rose 86% to $403.4 million, reflecting the strong operating performance.
The key driver was a record quarterly steel shipment of 3.6 million tons, underpinned by strengthened domestic steel demand, a rebound in customer orders, and growing backlogs. Average selling prices in the steel segment increased 19% (or $193 per ton) year-over-year, outpacing a modest 3% increase in metallic raw material costs. This resulted in a 30% expansion in the steel segment's metal spread (selling price minus ferrous scrap cost).
Steel Operations: Net sales increased 16% to $3,656.8 million, while operating income soared 143% to $555.5 million. The segment shipped 3.6 million tons (including intra-segment), up 5% year-over-year, though external shipments fell 3%. The 19% average selling price increase, combined with a 3% increase in metallic raw material costs, drove substantial margin expansion.
Metals Recycling Operations: Net sales rose 5% to $1,125.4 million, and operating income jumped 85% to $47.5 million. Ferrous scrap average selling prices increased 5%, while nonferrous scrap prices rose 20%. Nonferrous metal spreads expanded 81%, benefiting from higher copper prices.
Steel Fabrication Operations: Net sales edged up 1% to $355.5 million, but operating income fell 23% to $89.5 million due to a 14% contraction in metal spreads. Average selling prices declined 5% per ton, while steel input costs rose 10%. Despite this, customer order activity significantly increased, with the backlog over 38% higher year-over-year.
Aluminum Operations: Net sales surged 141% to $242.1 million, reflecting the ramp-up of the flat rolled mill. However, the segment reported an operating loss of $64.6 million, compared to a $28.7 million loss in the prior-year period, due to normal startup issues including a temporary production pause that has since been resolved.
Management expressed a positive outlook for the steel segment, citing an improved market environment supported by domestic trade actions, manufacturing onshoring, and infrastructure program funding. Long product steel demand remains very strong, particularly for structural steel and railroad rail. For aluminum operations, both shipments and earnings are expected to increase in the second quarter of 2026 as the flat rolled mill progresses through startup. The company's liquidity position is strong at $2.0 billion, with $1.2 billion available under its revolver, sufficient to fund planned 2026 capital requirements. The company also increased its quarterly dividend by 6% to $0.53 per share, reflecting confidence in future cash flow generation.