Reliance Steel & Aluminum Co. on Wednesday nearly doubled its first-quarter earnings estimates as surging demand and rising steel prices fuel profit.
The Los Angeles-based metal distributor and processor said it would earn 75 to 85 cents a share in the first quarter ending March 31, up from its previous guidance of 40 to 45 cents a share.
"Metal prices have continued to rise and demand has been even better than we previously anticipated," said Reliance Chief Executive David H. Hannah.
Analysts had expected the company to earn about 42 cents a share, according to the average estimate from Thomson First Call.
Wednesday's news boosted the company's shares more than 5%, but they ended the day up 84 cents, or 2.8%, at $31.39 on the New York Stock Exchange. The company's stock has more than doubled from its 52-week low of $14.51 last March.
Nucor Corp., Steel Technologies Inc. and other U.S. metal firms boosted their profit outlooks last week, sending stock prices in the sector soaring.
After more than two years of languishing demand and prices, Hannah said, demand for all of its metal products except for aircraft aluminum has risen as a strengthening economy boosted orders from manufacturers. China, analysts say, has been buying huge amounts of steel in recent months for construction, transportation and other infrastructure, driving the cost of the metal substantially higher.
A report Friday by the Metals Service Center Institute showed a steep rise in steel shipments and a slight drop in inventory for the second month in a row.
Reliance is expected to announce its earnings before the markets open on April 15.