Steel Dynamics' Q2 2026 EPS rose 84% to $3.69 on 33% higher sales, as average steel prices rose $164 a ton while scrap costs rose just $4, widening its metal spread by 22%.
Steel Dynamics had its most profitable quarter in several years in Q2 2026 (the three months to June 30). Net sales rose 33% to $6.09 billion, and net income attributable to shareholders rose 79% to $534 million, or $3.69 per diluted share against $2.01 a year earlier. Most of the gain came from one gap: the company sold steel for much more than a year ago, while its main raw material cost almost the same.
The average price Steel Dynamics got for steel sold to outside customers rose $164 a ton to $1,298 (from $1,134).
The average cost of the ferrous scrap it melts rose just $4 a ton to $412 (from $408).
Steel Dynamics makes steel in electric arc furnaces, which melt recycled scrap metal rather than making iron from ore. Its most important profit measure is therefore the metal spread: the steel selling price minus the cost of the scrap used to make it. The 10-Q says scrap and other metal inputs are "approximately 55% to 65%" of its steel mills' manufacturing costs. It reports that "as a result of average selling prices rising more than scrap costs, metal spread... increased 22%" from a year earlier, and that "as a result of this metal spread expansion, operating income for the steel operations increased 89%."
The Q2 total includes a $16 million non-cash impairment, an accounting write-down of an asset's value with no cash spent. It followed the decision to move a planned aluminum slab plant from Arizona to Columbus, Mississippi. Without it, EPS would have been slightly higher.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$6,091.6M
$4,565.1M
+33.4%
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Operating margin is the share of sales left after running the business, before interest and tax. Adjusted EBITDA is the company's own non-GAAP measure: earnings before interest, tax, depreciation and amortization, excluding certain non-cash items such as the impairment.
Where the profit came from, by segment
Segment operating income
Q2 2026
Q2 2025
Change
Steel operations
$720.9M
$382.2M
+89%
Metals recycling
$47.8M
$21.3M
+125%
Steel fabrication
$84.6M
$93.1M
−9%
Aluminum (startup)
−$33.4M
−$40.6M
loss narrowed
Steel (about two-thirds of sales). Steel accounts for nearly all of the improvement: segment operating income rose $339 million, while consolidated operating income rose $318 million. The 10-Q describes demand as solid, customer inventories as "lower than historical norms," and backlogs and lead times as "extended." The energy, non-residential construction, automotive, industrial and agricultural markets led demand. Long products (structural beams and railroad rail) were described as especially strong.
What the shipment record does and doesn't show. Total steel shipments reached a record 3.74 million tons, up 11.7%. The company's mills produced almost the same amount of steel as a year earlier (+0.8%), though. Most of the extra volume came from the steel processing divisions, which cut, coat and distribute steel. Their shipments rose 50% to 718,000 tons, largely because Steel Dynamics bought the remaining 55% of New Process Steel, a Houston-based metals processor and distributor, on December 1, 2025 and began counting all of its sales. Sales to outside customers, which exclude steel passed between the company's own units, grew a more modest 6.8%. The profit jump therefore came mainly from price, with volume playing a smaller part.
Tariffs. The 10-Q does not put a number on how much tariffs helped. It lists "domestic trade actions" as one support for pricing, alongside manufacturing reshoring (factories moving back to the US), infrastructure funding and more regional supply chains. Separately, the earnings release says "the impact of unfair trade practices continues to diminish." The clearest evidence of that effect is in the price data: the $164-a-ton price gain against a nearly flat scrap cost is consistent with less import competition. The company does not split out how much of the gain came from trade policy and how much from demand.
Metals recycling. Operating income more than doubled to $47.8 million. The 10-Q says the main driver was spreads on nonferrous metals (non-iron metals such as copper and aluminum), which "increased 52%, particularly due to increased copper prices," even though nonferrous shipments fell 14%. Ferrous (iron-based) spreads rose 20%.
Steel fabrication moved the other way. This segment makes steel joists and deck used in the frames of non-residential buildings. Its shipments rose 19% to 161,010 tons, but its average selling price fell 3% ($75 a ton, to $2,442). Meanwhile the cost of the steel it buys rose 8%. Its metal spread therefore "contracted 11%... due to rising steel input costs," and operating income fell 9%. The higher steel prices that help the steel mills are a cost for this segment. The order backlog is nearly 45% higher than a year ago and extends into Q1 2027, with demand from data centers, warehouses, manufacturing and healthcare.
Aluminum is still in startup. The new aluminum flat-rolled mill in Columbus, Mississippi shipped 53,000 metric tons in the quarter, up 135% from Q1. Aluminum sales to outside customers reached $498 million, against $66 million a year ago. The segment is still losing money: an operating loss of $33.4 million before the $16 million impairment, compared with $64.6 million in Q1. The company expects "volumes and profitability from its aluminum operations to increase sharply in the second half 2026."
Below the operating line: interest costs doubled
Net interest expense rose 125% to $39.1 million. The 10-Q explains that most of the increase is an accounting change: while the aluminum mill was being built, interest on the money borrowed for it was added to the project's cost ("capitalized") instead of being charged against profit. That ended when construction was "substantially completed in the second half of 2025," and capitalized interest fell $18.8 million. New senior notes issued in March and November 2025 also added to the debt balance. The effective tax rate was unchanged at 22.3%.
Profit sharing, which is set at 8% of pretax income for eligible employees, rose 87% to $57.3 million. That is expected in a strong quarter, but it takes back part of each extra dollar of earnings.
Cash and capital returns
Operating cash flow was $428 million, lower than the earnings figure. Higher prices meant customers owed the company more money at quarter-end: accounts receivable absorbed $387 million of cash in Q2 and $760 million in the first half. Capital spending fell to $124 million from $288 million a year earlier because the aluminum project is largely built. The company bought back $200 million of its shares, paid $77 million in dividends (the quarterly dividend rose to $0.53 from $0.50) and ended with $2.0 billion of liquidity.
Takeaway: Steel Dynamics' 84% EPS growth comes almost entirely from steel prices rising $164 a ton while scrap costs rose $4. Its mills produced only 0.8% more steel, and the headline shipment record mostly reflects the New Process Steel acquisition. Earnings therefore depend heavily on how long the price-to-scrap gap stays this wide, and that gap is currently supported by trade protection and low customer inventories.
Outlook
What management says. On September 17, 2026, the company guided Q3 2026 EPS to $5.34–$5.38, compared with $3.69 in Q2 and $2.74 in Q3 2025. That would be roughly double the prior-year quarter. The reasons it gives:
Steel profits expected to be "significantly higher" than in Q2, "driven by metal margin expansion across the platform and record shipments," with higher selling prices and lower scrap costs.
Metals recycling earnings expected to fall because of lower spreads.
Fabrication expected to improve modestly, with the backlog nearly 50% above last year.
Aluminum expected to "improve meaningfully." All three cold mills are running, and the automotive finishing line is expected to ship commercial material in Q4.
The company also said it had bought back $261 million of stock so far in Q3. It plans to report Q3 results after the market closes on October 19, 2026.
Our view. The Q3 guidance suggests spreads are still widening, because selling prices are rising while scrap is getting cheaper. That combination usually appears near the stronger part of the steel cycle. Steel is a cyclical commodity business. When import barriers raise domestic prices, US buyers eventually respond by importing more steel, finding substitutes or buying less. Low customer inventories, which support pricing now, can also rebuild quickly. The risks are tariff policy (which can change by executive action), non-residential construction activity and scrap prices. Earnings could lose a large part of recent gains if prices fall back toward 2025 levels while costs stay put. Two factors could offset that: an aluminum business that is moving from losses toward profit in 2027, and a fabrication backlog that now reaches into 2027. Neither is large enough yet to replace steel if the spread narrows.
Source: Steel Dynamics Form 10-Q for the quarter ended June 30, 2026 (filed July 28, 2026), and the Q2 2026 earnings release (Exhibit 99.1, July 20, 2026) for segment tables and per-ton data.