Steel Dynamics Guides Q3 Earnings Sharply Higher as Steel Margins Expand

Steel Dynamics Inc. expects third-quarter 2026 earnings of $5.34 to $5.38 per diluted share, well above both the prior quarter and year-earlier period, as higher steel selling prices, lower scrap costs and record steel shipments strengthen margins. Metals recycling is expected to weaken, while aluminum and steel fabrication improve.

By Paul Ploumis
Published September 21, 2026

MONTREAL (Scrap Monster): Steel Dynamics Inc. expects a substantial increase in third-quarter earnings as stronger steel pricing, lower scrap input costs and record shipments widen margins across its steel operations.

The Fort Wayne, Indiana-based producer forecast diluted earnings of $5.34 to $5.38 per share for the third quarter of 2026.

That compares with $3.69 per diluted share in the second quarter and $2.74 per share in the third quarter of 2025.

Steel Operations Expected to Drive the Earnings Increase

Steel Dynamics expects the largest sequential improvement to come from its steel operations.

The company said average realized steel selling prices are expected to increase while scrap costs decline, expanding metal margins across the platform.

At the same time, Steel Dynamics expects record steel shipments during the quarter.

Customer order activity remains strong, supported by low inventory levels and demand across non-residential construction, energy, automotive and industrial markets.

For the steel industry, the combination is notable: higher selling prices are being paired with lower scrap input costs rather than offset by weaker shipment volumes.

Lower Scrap Costs Improve Mill Margins

Scrap is a critical input for Steel Dynamics’ electric-arc-furnace steelmaking operations, so lower raw-material costs can materially affect mill profitability when finished-steel prices remain firm.

The company specifically cited lower scrap costs as one of the drivers of third-quarter metal-margin expansion.

That should not be read as a forecast that all ferrous scrap markets are weakening. Steel Dynamics did not provide a grade-by-grade scrap-price outlook in its guidance.

Instead, the statement reflects the company’s expected relationship between its realized steel selling prices and its own scrap raw-material costs during the quarter.

Metals Recycling Earnings Expected to Decline

The metals recycling segment is moving in the opposite direction.

Steel Dynamics expects third-quarter recycling earnings to fall from the second quarter because of lower metal spreads and modestly lower shipments.

In the second quarter, metals recycling generated approximately $48 million in operating income. Earnings were supported by higher volumes even as pricing moved lower during that period.

The Q3 guidance therefore points to a tighter recycling-margin environment rather than a collapse in underlying steel demand.

For scrap processors, that distinction is important: steel-mill profitability is expected to strengthen while the company’s recycling business experiences narrower spreads.

Fabrication Backlog Nearly 50% Above a Year Ago

Steel fabrication earnings are expected to improve modestly from the second quarter.

Higher shipments are expected to more than offset margin compression caused by higher steel input costs and the relationship between selling prices and raw-material costs.

Customer activity remains strong. Steel Dynamics said its fabrication backlog is now nearly 50% higher than in the third quarter of 2025 and extends through the first quarter of 2027.

Demand is being supported by commercial construction, data centers, warehousing, manufacturing and healthcare projects.

The company also expects domestic manufacturing investment, infrastructure spending and continued onshoring activity to support further fabrication-volume growth in 2027.

Aluminum Earnings Expected to Improve Meaningfully

Steel Dynamics also expects a sizable improvement from its developing aluminum business as shipments increase.

The company continues to commission its aluminum flat-rolled products mill in Columbus, Mississippi.

All three cold mills are now operational. The first of two Continuous Annealing and Solution Heat, or CASH, lines is operating and is expected to begin shipping commercial material during the fourth quarter.

The second CASH line is expected to begin producing material for customer qualification before year-end.

The progress follows continued ramp-up during the second quarter, when aluminum flat-rolled sheet shipments reached 53,000 metric tons and hot-band production reached 84,000 metric tons.

Q2 Provides the Baseline

Steel Dynamics entered the third quarter following a strong Q2 performance led by record steel shipments.

Second-quarter steel operating income totaled approximately $721 million, up 30% from the first quarter as pricing increased more than ferrous scrap costs.

The average external selling price for steel operations increased by $105 sequentially to $1,298 per ton, while the average ferrous scrap cost per ton melted increased by $16 to $412 per ton.

Metals recycling generated approximately $48 million of operating income, steel fabrication contributed about $85 million, and aluminum operations recorded an operating loss of approximately $33 million as the new platform continued its startup.

Demand Signals Remain Strong Across Key Markets

Steel Dynamics’ guidance provides several useful demand signals beyond the headline earnings figure.

Steel customer order activity remains strong and inventories remain low, helping support favorable pricing conditions.

The company identified non-residential construction, energy, automotive and industrial markets as the leading steel-demand sectors.

Fabrication demand is also supported by commercial construction, data centers, warehouses, manufacturing and healthcare.

The breadth of those end markets suggests the company’s stronger steel outlook is not tied to a single customer segment.

Share Repurchases Reach $261 Million During Q3

Steel Dynamics said it has repurchased approximately $261 million of its common stock so far during the third quarter, representing just under 1% of outstanding shares.

The buybacks continue the company’s capital-return program alongside ongoing investment in steel, fabrication and aluminum capacity.

Why the Guidance Matters to the Scrap Industry

Steel Dynamics is both a major electric-arc-furnace steel producer and one of North America’s largest metal recyclers, giving the guidance particular relevance to the scrap market.

The outlook contains two different signals.

On the mill side, lower scrap costs are helping widen steel margins while demand and shipments remain strong. That supports the economics of EAF production.

On the recycling side, however, narrower metal spreads and slightly lower shipments are expected to reduce profitability.

That divergence shows why scrap processors cannot rely solely on steel-mill earnings as a proxy for recycling margins. Mills can benefit from lower raw-material costs at the same time recyclers face more difficult spread conditions.

Market Read

The most important takeaway from Steel Dynamics’ third-quarter guidance is the widening gap between downstream steel profitability and upstream recycling margins.

Steel operations are expected to benefit from record shipments, higher realized prices and lower scrap costs. Fabrication demand is also strengthening, with a backlog nearly 50% above year-earlier levels.

Metals recycling, by contrast, is expected to earn less because of tighter spreads and modestly lower volumes.

For the recycling industry, that creates a mixed but useful signal: steel consumption remains healthy, but the economics of handling and trading scrap are becoming less favorable than the economics of converting that scrap into finished steel.

What to Watch Next

• Steel shipments: whether Q3 reaches the record level indicated in the guidance.
• Scrap costs: the actual average ferrous scrap cost per ton melted during the quarter.
• Metals recycling margins: how far spreads compressed compared with Q2.
• Fabrication backlog: whether elevated orders continue to support 2027 volumes.
• Aluminum ramp-up: commercial shipments from the first CASH line and qualification work on the second line.
• Q3 results: Steel Dynamics plans to report after market close on October 19, 2026.
• Earnings call: management will discuss the quarter on October 20 at 11:00 a.m. Eastern Time.