July 17 (Reuters) - Steel Dynamics on Wednesday reported a drop
of 47% in second-quarter profit, amid declining domestic steel prices.
Oversupply in the market,
stemming from both domestic production and imports, has led steel distributors
to refrain from purchases beyond immediate inventory needs.
The steelmaker and peers Nucor
and U.S. Steel, a month earlier, had warned of a fall in quarterly profits on
account of the deteriorating steel prices.
"We experienced customer
order inconsistency within the steel platform despite the steady underlying
demand dynamics, as scrap prices further declined and customers continued to
manage to very low inventory levels," said Steel Dynamics CEO Mark
Millett.
With prices anticipated to
decline further through summer, when steel consumption traditionally wanes,
analysts expect steelmakers to curb supply until domestic demand rebounds from
inflationary pressures.
The company is betting on sectors
such as automotive, non-residential construction and industrials, with a hope that
market conditions would support solid domestic steel consumption in the second
half of the year.
"Continued onshoring of
manufacturing businesses, combined with the expectation of significant fixed
asset investment to be derived from public funding... will competitively
position the domestic steel industry," Millett said.
The company's net profit for the
quarter ended June 30 was $427 million, or $2.73 per share, compared with $812
million or $4.83 per share, a year earlier.
The total revenue for the quarter
was $4.63 billion. (Reporting by Aatreyee Dasgupta, Pratyush Thakur in
Bengaluru; Editing by Mohammed Safi Shamsi)