Steel Dynamics (STLD) Q3 2026 earnings review
Steel Dynamics profit nearly doubles, but aluminum misses its plan
Steel Dynamics' mills made much more money on higher steel prices, while its new aluminum mill fell short of plan. Revenue rose 35% from a year ago and profit per share nearly doubled, because steel sold for more while scrap cost less. Chief executive Mark Millett said a quality problem, now fixed, held back aluminum sheet shipments for several weeks, so volumes grew only 4% from the previous quarter.
| Revenue | $6.51B +35% from a year ago |
|---|---|
| Profit per share | $5.26 +92% from a year ago |
| Aluminum sheet shipments | 55,000 metric tons +4% from last quarter |
| Outlook | No financial targets aluminum volumes and profit to improve in Q4 and 2027 |
⚖️ Verdict: ⚪ Neutral
The story is unchanged, because the steel business delivered more than it needed to while the aluminum mill delivered less than it promised. The good news: fabrication orders are now 50% above a year ago, and profit there turned up for the first time in 2026. One caution: the second automotive aluminum line has slipped to early 2027. To meet July's promise of a profitable second half, the mill must now earn more in the fourth quarter than it lost in the third.
The question now is whether October's recovery at the aluminum mill is the start of the sharp ramp management promised or another good month before the next setback. If fourth-quarter shipments and profit step up as the outlook says, the earnings story broadens beyond the steel cycle; if they do not, the growth case still rests on steel prices holding. The fourth-quarter aluminum shipment figure and operating result, due in January, will settle it.
🐂 Bull Case
Steel Prices Rose While Scrap Costs Fell
Steel Dynamics melts scrap in electric furnaces, so its profit depends on the gap between the price it charges for steel and the cost of scrap. Chief executive Mark Millett said prices kept rising because "lead times extended and spot availability tightened across flat-rolled and structural steel products".
Coated-steel imports fell after recent trade actions, Millett said, so "value-added flat-rolled steel spreads also expanded". At the same time the group shipped a record 3.78 million tons, with long products such as beams and rail leading the gain.
- Selling price: $1,400 a ton, up $102 from last quarter
- Scrap cost: $404 a ton melted, down $8 from last quarter
- Price less scrap: $996 a ton by our math, up 35% from a year ago
- Steel operating income: $1.03 billion, up 43% from last quarter
Because the extra price went straight to profit, the cost of goods sold fell to 80.3% of revenue from 84.3% a year ago. That one line explains most of the margin gain. One caution: the record total leans on the processing divisions, which include New Process Steel, bought last December; the three big flat-rolled mills shipped 5% fewer tons than a year ago.
What to watch: the average steel selling price in the fourth-quarter results in January. Steel Dynamics has said most flat-rolled sales follow market prices with a delay of about two months, so a price still near $1,400 would show the summer's gains held.
Fabrication Orders Now Stretch Into Mid-2027
Steel Dynamics' fabrication unit makes steel joists and deck, the floor and roof framing used in warehouses, data centers and factories. Orders have kept building since the end of 2025, the company said, and the backlog is now 50% larger than a year ago and runs into the second quarter of 2027.
The unit shipped 25% more tons than a year ago, with demand from commercial construction, manufacturing, warehouses, data centers and healthcare. Profit rose from last quarter because higher shipments and slightly better prices outweighed the higher cost of the steel it buys.
- Operating income: $91 million, up 7% from last quarter and down 15% from a year ago
- Average price: $2,462 a ton, up $20 from last quarter but $33 below a year ago
- Operating margin: 19.4% of segment sales, down 8.9 points from a year ago by our math
The risk in this backlog is that it grows on volume while profit per ton shrinks, because the unit buys steel at today's prices and sells on quotes made months earlier. This quarter the average price rose from the previous quarter for the first time this year, so the squeeze has stopped getting worse.
What to watch: the fabrication operating margin in the fourth-quarter results. A margin above this quarter's 19.4% would show the higher-priced orders now in the backlog are reaching the profit line.
Buybacks Removed Another 1% of Shares
Steel Dynamics returns cash by paying a dividend and buying back its own shares, which spreads profit across fewer shares. This quarter it repurchased $276 million of stock, about 1% of the shares outstanding. Dividends took another $76 million.
Cash from operations was $846 million, which covered the buyback, the dividend and the quarter's capital spending with room to spare. The diluted share count is 2.7% lower than a year ago, so profit per share grew faster than net income.
Nine months into the year, buybacks total $591 million, about 2% of the shares. Net debt stands at 0.9 times the last twelve months' adjusted EBITDA, profit before interest, tax, depreciation and amortization, so the balance sheet leaves room to keep going. Liquidity, meaning cash plus the unused credit line, is $2.4 billion.
What to watch: the fourth-quarter repurchase total. A figure near this quarter's $276 million would confirm that the pace set since the second quarter is the new normal rather than a one-off.
🐻 Bear Case
Aluminum Volumes Rose 4%, Not Sharply
Steel Dynamics is building a business that rolls aluminum sheet for drink cans, cars and industrial goods at a new mill in Columbus, Mississippi. In July it said second-half volumes and profit would rise sharply, and this quarter's presentation still carries the heading "Startup on Track".
Finished sheet shipments reached 55,000 metric tons, only 4% above last quarter. Millett said "Volumes were less than expected over a number of weeks, as yield losses increased at higher operating speeds due to quality impacts", blaming the coolant on the hot rolling mill, which the mill has since replaced.
- Operating loss: $26 million, 21% smaller than last quarter; EBITDA at breakeven
- Hot band production: 91,000 metric tons, up 8% from last quarter
- Second CASH line, the heat-treating line for car-body sheet: now due to run early in 2027, after plans for the third and then the fourth quarter of 2026
"Since the change, the mill performance has been excellent in October," Millett said. That claim faces a hard test, because in July management said aluminum would earn an operating profit across the second half, which now requires a fourth-quarter profit larger than this quarter's $26 million loss.
What to watch: fourth-quarter aluminum shipments and operating profit, due in January. A profit on shipments well above 55,000 tons would show the coolant fix worked and the timetable has stopped moving later.
Recycling Profit Fell a Third on Cheaper Scrap
Steel Dynamics' recycling arm collects and processes scrap, selling most of its iron scrap to the group's own mills and the rest, with copper and aluminum scrap, to outside buyers. Operating income fell to $33 million from $48 million last quarter because of "lower ferrous scrap pricing and metal spread contraction", the company said.
Cheaper scrap helped the steel mills, which paid $8 a ton less, so inside the group much of this loss is a transfer. The non-ferrous side is not: shipments of copper, aluminum and other non-iron scrap fell 17% from a year ago, extending a decline that has run every year since 2022.
This matters because the recycling arm is meant to feed the aluminum mill with used cans and other scrap, and Millett plans to raise the mill's scrap content next year, so shrinking non-ferrous volumes sit awkwardly beside that plan.
What to watch: non-ferrous shipments in the fourth quarter. A figure back above 211 million pounds, last quarter's level, would show the slide has stopped before the aluminum mill needs the volume.
Risks this quarter didn't answer
Five standing concerns got no new reading in the release or the presentation, so each stays where it was until the number named below arrives.
- Steel price reversal: most flat-rolled sales follow the market with a delay, so a drop would reach profit a quarter late; the fourth-quarter selling price is the reading.
- Aluminum earnings at today's prices: the $650–700 million yearly EBITDA target still rests on figures "Based on analysis of historical pricing and margins from 2017 to 2021"; no current-price figure yet.
- Tariff dependence: the steel spread rests on trade measures an administration can reverse; nothing changed this quarter.
- Hedging and working capital: receivables stopped growing this quarter, but the net effect of futures losses booked in cost of goods sold waits for the quarterly filing.
- Pig iron and prime scrap supply for the flat-rolled mills: no comment this quarter.
👓 Other Themes
Millett Flags New Steel and Aluminum Capacity Coming
In his outlook, Millett listed the demand he expects to carry 2027: infrastructure, manufacturing, energy and data centers, helped by "a supportive U.S. trade environment and reduced unfairly traded import competition". He also noted that "additional domestic steelmaking and aluminum capacity may enter the market in the coming years", though he believes demand and trade policy will keep the industry healthy.
💲 Other KPIs
Inventories rose 7% from June, slightly faster than revenue, and sit 33% above a year ago. Steel Dynamics is carrying more aluminum and steel stock as the new mill ramps and steel prices rise, and the build absorbed $294 million of cash this quarter, the largest working-capital item in the cash flow statement.
Capital spending was $150 million, down 10% from a year ago, as the aluminum mill's construction bill winds down. In July the metals group planned $300–350 million for the second half. By our math that leaves $150–200 million for the fourth quarter. Nine-month spending is $411 million, about half last year's level.
Interest expense rose to $39 million from $14 million a year ago. Steel Dynamics issued new notes last year to refinance maturing debt and fund the aluminum build, so it now carries more debt at higher coupons. Over nine months the bill is $112 million against $43 million a year ago.
🔮 Guidance
Unchanged in direction. The plan still has aluminum volumes and profit rising in the fourth quarter and through 2027 as startup costs fade, yields improve and the mill uses more scrap. The word sharply, used in July, does not appear this time. Millett said the mill has run well since the coolant change in October, with no further costs expected from the problem.
Later. The line will "be commissioned in the coming months and become operational early in the first quarter 2027". That is the second move this year: in April Steel Dynamics planned to commission it in the third quarter, in July to start qualifying material in the fourth.
Unchanged. The first CASH line is running, and the company expects it to ship finished automotive products before year end. Those would be the first sales into the car market, which the presentation puts at 35% of the mill's planned output.
Raised. The backlog growth rate has climbed at each report this year, from 38% in April to 50% now, and the order book reaches one quarter further out. Demand came from commercial construction, manufacturing, warehouses, data centers and healthcare, the metals group said. Shipments have followed the backlog with a delay; whether price per ton follows is the open item.
Unchanged. Millett expects consumption to grow with investment in infrastructure, manufacturing, energy and data centers, helped by trade measures that have kept imports low. Steel Dynamics gave no financial targets for 2027, as is its practice, and added that more domestic steel and aluminum capacity may arrive in the coming years.
❓ Key Questions
What does the aluminum mill earn at today's prices?
The $650–700 million yearly EBITDA target still rests on 2017–2021 pricing, per the presentation footnote. Management said in July it would update the figure soon; this quarter brought no number.
How much volume did the coolant problem cost?
Millett said yields fell "over a number of weeks". The gap between 91,000 tons of hot band produced and 55,000 tons shipped is the figure to explain, along with October's actual shipping rate.
What did hedging cost in the quarter?
The second-quarter filing showed sizeable futures losses inside cost of goods sold. Their net effect after offsetting items has never been disclosed, and the third-quarter figure waits for the filing.
What will 2027 capital spending go on?
In July management put 2027 spending at up to $500–600 million against about $250–300 million of upkeep. The release names no project for the difference beyond the biocarbon plant and the US slab center.
What price do the new fabrication orders carry?
The backlog is 50% larger by volume, but the average selling price is still $33 a ton below a year ago. Whether orders taken at today's steel prices lift the average decides fabrication profit in 2027.