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Steel Dynamics (STLD) & Aymium Form JV to Cut Steel Emissions

Zacks Equity Research
·3-min read

Steel Dynamics, Inc. STLD announced a strategic joint venture (JV) with Aymium, a leading producer of renewable biocarbon products. Steel Dynamics owns 55% of the joint venture, with Aymium owning the remaining 45%. It will operate under the name SDI Biocarbon Solutions, LLC.

The initial plans for the partnership include constructing and operating a biocarbon production site to supply Steel Dynamics' electric arc furnace steel mills with a renewable alternative to fossil fuel carbon utilizing Aymium's patented technology. The initial facility's production capacity is projected to be more than 160,000 metric tons annually, for an estimated capital investment of $125-$150 million. The facility is expected to commence operations in late 2023.

Steel Dynamics stated that it believes this strategic JV will considerably reduce its steelmaking greenhouse gas emissions, which are already materially lower than global competitors, in a cost-effective manner. It also believes Aymium's process can provide a renewable fossil fuel carbon alternative for Iron Dynamics, its proprietary ironmaking operations.

This investment marks a major step forward on STLD’s path to carbon neutrality, and its continued commitment to lower environmental footprint, the company noted.

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Shares of Steel Dynamics have gained 13% in the past year against a 19% decline of the industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Steel Dynamics sees record earnings for second-quarter 2022 in the range of $6.33-$6.37 per share. The company’s guidance for adjusted earnings is pegged in the range of $6.61-$6.65 per share, barring the impact from costs related to the startup of its Sinton Texas Flat Roll Steel Mill growth investment of roughly $76 million or 28 cents per share.

The company expects second-quarter profitability from its steel operations to be historically strong but lower than first-quarter 2022 levels. The downside will likely be caused by lower earnings from the company's flat roll steel operations, as average flat roll pricing is expected to offset projected higher shipments.

Steel Dynamics, Inc. Price and Consensus

 

Steel Dynamics, Inc. Price and Consensus
Steel Dynamics, Inc. Price and Consensus

Steel Dynamics, Inc. price-consensus-chart | Steel Dynamics, Inc. Quote

 

Zacks Rank & Key Picks

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Allegheny Technologies Inc. ATI, Cabot Corporation CBT and Nutrien Ltd. NTR.

Allegheny has a projected earnings growth rate of 1,076.9% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 40.4% upward in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI has gained around 10.8% in a year and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current year. The Zacks Consensus Estimate for CBT's earnings for the current year has been revised 6% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 13.9% over a year.

Nutrien has a projected earnings growth rate of 174.6% for the current year. The Zacks Consensus Estimate for NTR’s current-year earnings has been revised 30.7% upward in the past 60 days.

Nutrien’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 5.8%. NTR has gained 39.6% in a year. The company flaunts a Zacks Rank #1.


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