SDI Reports ‘Excellent’ Steel Mill Backlogs Amid Some Concern with Imports
SDI’s steel plants are all running with excellent backlogs right now, according to Barry Schneider, president and COO, speaking during the company’s earnings call with analysts Wednesday. “We are enjoying strength in all of the markets we participate in,” he said. On the supply side, however, there is more attention being paid to increasing steel imports.
Schneider was asked about the supply side going forward, and specifically if there is any worry that steel pricing levels have caused customers to have a stronger appetite for more foreign material. He said: “We are seeing certain countries shipping through the (Section) 232s. The offset pricing in the Asian markets has a lot to do with that.” He pointed to “very high accelerated rates of all steel exports from primarily three countries in Asia. These are disruptive. It is a response to their economies needing to export.”
Schneider says SDI is hoping “the administration looks at what quotas were in place in some of these countries prior and they look at what exactly the 232 is meant to do and try to rein it back in.” He believes the short-term disruption of these imports will “hopefully be abated here in Q3, Q4.” The SDI COO emphasized: “But we remain competitive with all our customers and the dialogue of getting steel when they need it and being on time is usually the big factor for what our customers are looking for.”
Schneider also said that the price spreads between hot-rolled coil and galvanized/painted products have returned to somewhat normal levels. “We’re very bullish on what our coating facilities can do for us,” he said, noting the spread between HRC and galvanized was about $100 at the start of 2026, but now is “a little over $220 or so.” Like other producers, SDI is benefiting from the impact of the CORE trade cases successfully resolved last year.
During the second quarter of 2026, the domestic steel industry operated at an estimated production utilization rate of 81%, while SDI’s steel mills operated at 90%. “We consistently achieved higher utilization due to our value-added product diversification, differentiated customer supply chain solutions and the support of our internal manufacturing businesses,” Schneider noted. He explained that this higher through-cycle utilization is a key competitive advantage, “supporting our strong and growing cash generation and best-in-class financial metrics.”
Regarding flat-rolled steel markets, Schneider said conditions are strong as solid demand and lean inventory levels support a tight market environment. “Lead times are elevated and customers continue to express optimism,” said the COO.
Long product steel markets are also strong, according to Schneider, driven by strength in nonresidential construction. “We believe this strength will continue, especially within structural steel and railroad products,” he said, adding, “Special bar quality markets are also improving across multiple sectors, including industrial, manufacturing and energy-related markets.”
As for the broader steel market environment, North American automotive production forecasts for 2026 are to remain in line with last year, Schneider mentioned. “Despite a generally stable production environment, our specific automotive customer base continues to present us opportunities,” he said. “We have strengthened our position as a supplier of choice for many US-based European and Asian automotive producers, driven in part by our lower carbon content steel offerings and differentiated value-added product capabilities.”
SDI continues to benefit from ongoing reshoring trends and domestic manufacturing investments, which are supporting sustained demand across end markets. Schneider pointed to the energy sector where oil and gas activity “remains strong with pipe manufacturers already looking into 2027 projects.” Also, demand for the solar market also continues to be very robust.
“Additionally, we are seeing improved demand from the agricultural sector, although residential construction activity remains relatively subdued,” Schneider said.
Schneider acknowledged that the current administration’s 50% Section 232 tariff for imported steel on national security matters, fully supports the industry long term. “We are also actively engaged with the USTR regarding the USMCA review to ensure there are no weakening regarding our protections, including melted and poured provisions,” he added.
“On the demand side, we’re working closely with Congress to strengthen buy American steel requirements in the CHIPS for America Act and the Federal Highway Bill, turning large public spending vehicles into volume opportunities for our steel businesses,” Schneider said.
SDI’s steel fabrication operations also performed well in Q2, delivering solid earnings as increased demand and steady realized pricing helped offset higher steel input costs, according to Schneider. “Order activity has been stronger than we have seen in a number of years,” he said.
The increased fabrication demand has been led by several large markets, reducing the risk that any single sector derails the overall positive trajectory. “The Dodge Momentum Index, which generally leads construction spending by a 12- to 18-month window, increased to its highest recent level, up more than 30% year-over-year,” Schneider cited, noting that the increase was driven by commercial planning, accelerating institutional activity, led by health care. “The long-range project pipeline appears robust, supporting that idea,” he continued, “Contractor project backlogs also stood at over nine months in May, which is near the highest level in several years. Our steel fabrication order backlog was up over 45% compared to this time last year.”
SDI is also beginning to see improved pricing on the steel fabrication side. “We continue to have high expectations for the business this year due to positive customer sentiment, quoting activity, continued manufacturing onshoring and public funding for infrastructure and other fixed asset investment programs,” Schneider said, adding, “The uplift from this macro environment could be considerable.”
Schneider explained that SDI’s steel fabrication platform provides meaningful support for its steel mills, which is especially critical in softer demand environments, “allowing us to operate at higher through-cycle utilization rates than our peers.”
The company’s metals recycling operations performed well during the quarter, benefiting from increased scrap availability and higher shipments as improved weather conditions supported stronger seasonal collection activity. “We currently expect scrap pricing to stay relatively steady in the coming months,” Schneider said.
Asked about what’s next for SDI—specifically, perhaps another major mill—CEO Mark Millett acknowledged that the “hot band substrate requirement that has grown over the years and likely will grow a little more, obviously, is a potential growth avenue.” But he said: “So a big steel mill anytime soon? No.”
Millett suggested: “Given the dynamics within the supply-demand balance out there, it wouldn’t be a typical mill if we were to do it, but it wouldn’t be a mill that we’re going to build anytime soon.” He said the SDI steel team has a project pipeline of some value-add niche opportunities. “And as you’ve always known, we tend—we don’t strive to build and grow just to be big. We want to maintain that high-margin niche product supply chain type strategy.”
Regarding the power grid and electricity costs, Schneider does not see any “aberrations” short term but acknowledged the “concern about large users like data centers coming in and that is a regional thing.” He said, however, that SDI has completely different contracts at each steel facility.
“That’s just the nature of large loads,” he explained, adding, “But we are seeing ample support from all of our utility providers. We do benefit from running every hour of every week. So, there’s times at night when it’s low demand that pricing reflects that. Our teams are very responsive. They see the real-time pricing in their pulpits. They make good business decisions based on that information.”