Steel Dynamics posts US$403M Q1 profit as recycled scrap spreads drive margin growth

USA – Steel Dynamics Inc. has recorded net income of US$403 million in the first quarter of 2026, a 46 percent year-over-year increase, driven by record steel shipments of 3.6 million tons from its recycled-content electric arc furnace mills as steel pricing increased faster than ferrous scrap costs.

Within SDI’s Omni network of metals recycling facilities, first quarter operating income reached US$47 million, a 155 percent increase compared with the last three months of 2025, driven by higher ferrous and nonferrous average selling values. 

SDI paid an average of US$396 per ton for scrap in Q1 2026, while its average external steel product selling price was US$1,193 per ton. 

The US$86 per ton spread between scrap input and steel output drove margin expansion across the steel operations.

How Recycled Content Drives Profitability

SDI’s electric arc furnace steelmaking process uses recycled ferrous scrap as its primary feedstock, unlike traditional integrated mills that use iron ore and coal. 

This model requires reliable access to scrap and efficient recycling operations. 

The Omni network’s 155 percent operating income increase demonstrates that when steel prices rise, scrap-fed EAF mills can capture margin more quickly than integrated mills, which face longer lags between raw material cost increases and finished steel price adjustments.

The company’s steel operations generated US$557 million in operating income in Q1 2026, 73 percent higher than the prior quarter. 

SDI cites record shipments and metal spread expansion across the platform as steel pricing increased more than ferrous scrap costs. 

The energy, nonresidential construction, automotive, and industrial sectors led steel demand in the quarter.

Expanding into Recycled-Content Aluminum

Mark D. Millett, board chair and CEO of SDI, explained that the company has deliberately aligned its growth strategy with customers’ developing needs, prioritizing product excellence, supply-chain efficiency, and sustainability. 

Building on strong positions in steel, SDI is expanding into high recycled-content aluminum to serve adjacent markets where customer demand is accelerating.

The aluminum team continues making progress commissioning the Columbus, Mississippi aluminum flat-rolled products mill, as well as the San Luis Potosi, Mexico satellite recycled aluminum slab center. 

Two of three planned cold mills are ramping operations, and the first of two planned continuous annealing solution heat (CASH) lines is now operational.

When Scrap Becomes Strategic

A steel mill that pays US$396 for scrap and sells steel for US$1,193 per ton is not just recycling, it is engineering margin. 

SDI’s Q1 results prove that recycled-content manufacturing can outperform virgin-based production when spreads widen. For the recycling industry, that is the business case.

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