In response to the company’s guidance from last night, shares of Chicago-based industrial metal processor Ryerson (RYI 14.10, +1.80) trade about 14.6% higher to near three-month highs.
Specifically, RYI anticipates higher revenue for Q1 on both a sequential and year-over-year basis with higher average selling prices and higher tons sold for the current quarter as compared to both periods. Additionally, management highlighted demand conditions appear favorable when viewed against last year as US industrial production grew 0.4% in February compared to a year ago and has expanded for 3 straight months after 15 straight months of contraction.
RYI also expects Q1 net income attributable to Ryerson Holding Corporation in the range of $12-15 million, which includes a range of $2 million of LIFO expense, net to $2 million of LIFO income, net. Adjusted EBITDA, excluding LIFO is expected to be in the range of $53-55 million for Q1.
Last year, RYI reported Q1 net income attributable to Ryerson Holding Corporation of $14 million, which included LIFO income, net of $15 million. Adjusted EBITDA, excluding LIFO was $37 million in Q1 a year ago.
Aiding these gains, RYI anticipates higher average selling prices in Q1, which can be attributed to supply side stabilization and global metal demand improvement. The rise in prices for metallurgical coal, Chinese iron ore, and steel scrap, combined with increased Chinese domestic steel consumption and positive U.S. industrial sentiment indicators have supported higher steel prices.
The company noted Aluminum prices have steadily increased from September 2016 through Q1 on better than expected supply and demand fundamentals. Also, recent increases in chrome prices, driven by supply tightening, have positively impacted stainless steel prices in Q1, although nickel fundamentals have been volatile due to policy uncertainty in Indonesia and the Philippines, leading to some retracement of LME nickel prices in March 2017.
RYI’s full Q1 print will be released May 3, after the close.