By Mary de Wet
Commercial Metals Co. sees continued strength in construction markets that will support demand for steel.
On its outlook:
“Robust demand for each of CMC’s major product lines is expected to persist, augmented by our growing downstream backlog and solid levels of new work entering the project pipeline,” said Chairman, President and Chief Executive Barbara R. Smith.
“Looking into CMC’s fiscal 2023, we see several factors that should support continued strength in construction markets,” Ms. Smith said.
“Firstly, as a result of the continued high levels of new bidding activity, we anticipate entering our new fiscal year with historically high levels of contract backlog.
In addition, new project bid levels should remain strong based on the benefits of rising activity related to the recently enacted federal infrastructure bill, non-residential construction activity supported by follow-on investment in the wake of historically high new residential community formation in our home markets, and from the continuation of reshoring trends that have already resulted in significant new projects.”
On its third quarter:
“Demand for CMC’s finished steel products in North America was again robust during the quarter, with several key internal and external indicators pointing toward continued strength. Downstream bid volumes, a key indicator of the construction project pipeline, increased significantly from a year ago, resulting in In the expansion of contract backlog levels.Demand from industrial end markets continued to trend positively, with most end use applications increasing compared to the prior year period,” said the company, which makes, recycles and fabricates steel and metal products.
“Steel products have experienced five consecutive quarters of year-over-year margin expansion, while margins on raw material sales have grown for nine consecutive shipped quarters. Controllable costs per ton of finished steel were unchanged in comparison to the second fiscal quarter, but were up from the prior year period primarily as a result of higher per unit purchase costs for freight, energy and alloys.
“Shipment volumes of finished steel, which include steel products and downstream products, followed typical seasonal patterns, and were essentially unchanged from the prior year period. The average selling price for steel products increased by $316 per ton compared to the third quarter of fiscal 2021.” , while the cost of scrap utilized rose $103 per ton. The result was a year-over-year increase of $213 per ton in margin over scrap. The average selling price for downstream products increased by $281 per ton from the prior year period and $75 per ton on a sequential basis. Future pricing indicators on new work entering the backlog remain positive, as average price levels for bids and new awards climb significantly from the prior year period.”
In Europe, underlying demand for steel products remained robust, similar to North America, CMC said.
“Volumes of rebar, merchant bar, and wire rod increased on a year-over-year basis, assisted by the addition of a third rolling line, which improved production flexibility and the mill’s ability to capitalize on favorable market conditions. During the first 12 months of operating the new rolling line, quarterly shipment volumes of finished products have increased 35% compared to the average of the preceding five years.
“As a result of continued strong demand and constrained supply in the wake of trade sanctions against Russia and Belarus, average selling price increased by $303 per ton compared to the prior year quarter, while the cost of scrap utilized rose $154 per ton. was a year-over-year increase in margin over scrap of $149 per ton.”
Write to Mary de Wet at email@example.com