Steel Dynamics Inc.: Knockin' on Heaven's Door; Maintain OW on aluminum upside potential

研报英文原文证据摘录

Steel Dynamics Inc.: Knockin' on Heaven's Door; Maintain OW on aluminum upside potential

Barclays | Steel Dynamics Inc.

from the aluminum rolling mill from peak to trough to through cycle, given current market

dynamics.

Next catalyst: USMCA negotiations (July/August), SMU Steel Summit in Atlanta (August)

Investment Thesis

Additional details on key positives

1. Aluminum mill returns to ramp up: We view the return to rising aluminum rolling mill

volumes as the biggest positive within 2Q results. STLD noted that utilization rates

improved through 2Q, rising to 60% by quarter-end, with an expected exit rate of

~90% utilization by the end of 2026 with the start of the third cold line. This reiteration gives

us increased confidence in STLD's ability to get to targeted full utilization run rates by the

end of 2027, with a full year contribution in 2028. On an earnings basis, we expect the

aluminum segment to generate positive EBITDA in 2H26, $500m of EBITDA in 2027, and

$698m EBITDA in 2028.

2. Steel market dynamics remain supportive: STLD continues to see a favorable market

outlook for the domestic steel industry, supported by firm demand across each of its end

markets, contained supply with limited impacts from imports, low inventories and long lead

times combining to paint an optimistic picture.

3. Raw material input costs remain constrained: STLD expects scrap prices to remain to

flattish through the rest of 2026, despite a historically tight relationship between scrap and

HRC prices due to two factors; 1) the exemption of Brazil pig iron imports from tariffs under

Section 301, which should ease pressure on EAF producers costs, and 2) ample scrap

availability within the US due to low scrap exports, as well as the fact that new steel