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Steel Dynamics (STLD +1%) tends to provide EPS guidance around midway through the last month of every quarter. This steel producer maintained that routine last night. Unfortunately, the Q1 EPS guidance at $1.36-1.40 was a good bit below analyst expectations. This was STLD's fourth consecutive quarterly downside guidance, which is not a trend we like to see. In fairness, cold weather and the holidays tend to make Q1 a seasonally slower quarter, but this was still a letdown.

• STLD said it expects Q1's steel operations to be stronger than sequential Q4 results. Increased shipments are expected to more than offset some metal margin compression. STLD noted that contractual steel pricing lagged recent spot price improvements, which will be realized in the coming months. In terms of end markets, the energy, non-residential construction, automotive, and industrial sectors continue to lead demand.
• Its metals recycling operations are expected to be higher in Q1 than what we saw in Q4, based on stronger pricing and stable volumes for ferrous and nonferrous materials. However, its steel fabrication results are expected to be sequentially lower in Q1, based on seasonally lower shipments and less than a 5% decline in realized pricing. The silver lining is that the pace of order activity increased in Q1 and the order backlog improved, extending well into Q3.
• Importantly, the company also provided an update on its new facility in Sinton, Texas. The Flat Roll Division operated at production levels in excess of 90% in Q1. While not yet profitable, STLD sees a clear path to profitability in Q2 at its Sinton operations.
• Investors are watching the Sinton news closely. This is STLD's third flat rolled plant (Butler and Columbus are the others). This new mill is seen as transformational not only because it will boost STLD's overall production capacity. The key point is that it's designed to accommodate product size and quality capabilities beyond those of existing mini-mills, competing with integrated steel mills and foreign competition.

What is interesting is that the stock is ticking higher despite the downside guidance. Investors do not seem too worried as STLD tends to be conservative on guidance. Also, given the unease in the macro environment where customers are wary about spending, the guidance could have been worse. The steel tariffs are good for STLD as its comment about spot prices rising is a signal of that tricking down for STLD's benefit.

On a final note, Nucor (NUE) also tends to guide around the middle of the last month each quarter. We are a bit surprised that NUE did not guide this morning, but it should be soon.