Katja Jancic: Maybe I missed this, but was there a power issue during the first quarter?
Barry Schneider: We had talked about the primary side power last year and having some transformers that needed to be replaced. And that equipment is very long lead times. Our team was able to secure some shorter-term solutions that we’ve engineered into place and done the construction. So now that the outage is over, we could put that equipment in with the power off, we look to bring the new transformer support, so that the plant has full operation of capacity. We’ve been internally limited at about 80% of the power capability on the melting furnaces. So at this point now, this will help us remove that restriction. Where it’s finally utilized, it will be somewhere between now and the end of May. But this April outage was key to give us the opportunity to get the construction done to work on the high-voltage bus.
It requires the whole plant to be — have the power off. So again, great work happening. It’s unfortunate. These are long lead time items. And we’ve remedied the situation that we believe contributed to it. So we’re very excited this problem will be behind us here shortly.
Operator: Thank you. Your next question is coming from Lawson Winder from Bank of America. Your line is live.
Lawson Winder: Thank you, Operator. Good morning, Mark, Theresa, Barry. Thank you for today’s update. Could you share with us your views on the CRC, HRC spreads that have been quite robust recently? What are your thoughts on what’s driving that? And I know you don’t like to guide to pricing, but what are your — I’ll try this one and ask what your thoughts are on, what that might look like going forward?
Mark Millett: I will start. I would just reiterate what I’ve always said in past calls; coated products are gaining more and more market share just generally. And there are some pretty dynamic changes within the marketplace that is even added to that. If you think about the solar — solar market, which is absolutely huge today. You’re consuming around about 25 tons of coated product per megawatt. And again, we’re selling Nextracker and a whole bunch of folks, I think was something like 300,000 tons a year or thereabouts or even higher into that marketplace. And that’s coated flat roll, people turn that into tubes for the support structure of solar. So there are more and more applications being served by coated products today. It’s a tight market, and it’s supporting the higher spread.
Barry Schneider: I’d like to add to that, Mark, too, that the teams have been diversifying our coated profile. So we have many different kinds of coatings that we offer. And those various product lines provide a very good supply solution to our customers. So the whole supply chain has been maturing for these products, and it allows us to move our tons to balance our production needs, as well as where the markets are interesting. So we continue to believe that the spreads between coated and hot roll are — will be attractive. And it’s an area where we’ve really invested quite a bit of money over the last several years to make sure we have the right capabilities at our disposal and the right supply chain solutions for what the customers are asking for.
Lawson Winder: Maybe if I could just ask a follow-up on your — you’ve provided some commentary on fabrication order backlog and then the pricing on that. And you indicated it was above pre-COVID levels. Maybe if I could just try to get a little bit more color on that. Would it be fair to say that pricing in your new bookings and backlog, at least are converging to some level and perhaps ask how that might compare to 2023 levels?
Theresa Wagler: Lawson, I don’t think that we’re talking about comparing to 2023 levels. I don’t know if you were speaking specifically about pricing, if you were speaking about volume? But the pricing that’s in the backlog and the current spot pricing that we have, they are converging to your point, which would be expected as pricing stabilizes.
Lawson Winder: Okay. That’s exactly what I was looking for. Thank you very much.
Operator: Thank you. Your next question is coming from Tristan Gresser from BNP Paribas. Your line is live.
Tristan Gresser: Yes. Hi, thank you for taking my questions. Maybe a quick follow-up just on the fab business. It was my understanding, we should have seen some further moderation in ASP in Q2. You talk about the backlog stability and forward pricing, et cetera. So is this still the base case and that we should see another leg down in Q2, before we stabilize?
Theresa Wagler: Hey Tristan, hi, this is Theresa. We’re not specifically giving guidance on any of our segments from an earnings perspective. We don’t do that, but I’ll talk to you about certain levers. So we do expect, as Mark said earlier, and you would see this normally, but we will have higher on volumes, both across fabrication steel and mills recycling, as we move through the year, which is generally the case in the second, third quarter environment as you move out of the seasonality into stronger demand periods. So we absolutely expect to see that. There’s also the potential for additional support that we believe will be there as it relates to the public funding, probably more specifically in the second half of the year and then even more impactful, at least in my opinion in 2025, which will help provide demand — fixed asset demand-driven increases in volumes.
As it relates to the pricing and fabrication, we said that the change or the differential in pricing should start to diminish as it’s been stabilized, really starts stabilizing in middle of the fourth quarter. And certainly remains so in kind of January, March, February — sorry, January, February, March time frame. So you need to take a view on that price differential that we’ve kind of just helped explain and then on the steel input costs. So they keep about eight weeks — very probably about 8 weeks of inventory, principally flat rolled on the ground. So as that pricing has changed in the first quarter, those input costs will move into the second quarter as well?
