Oregon-based recycler and steelmaker Schnitzer Steel shipped higher volumes of nonferrous scrap in its fiscal second quarter, but lower average sales prices for those tons plus fewer and less-profitable ferrous scrap sales pinched margins.
The company's auto and metals recycling division saw its profit per ferrous ton fall by 50pc year over year to $25/gt in the quarter ended 28 February as ferrous scrap prices and volumes dropped, while lower zorba prices offset a rise in nonferrous volumes. Profit per ferrous ton was flat with the prior quarter.
Schnitzer sold 858,000gt of ferrous scrap in the quarter ended 28 February (around 286,000 gt/month), down by 4pc from the 896,000gt (around 300,000 gt/month) moved in that period a year ago. Average ferrous sales prices dropped by 9pc to $287/gt from the same time in 2018 and down by 6pc from the prior quarter.
Schnitzer pointed toward abnormally harsh winter weather impeding supply flows as the main contributor toward lower ferrous sales. Export shipments provided 60pc of ferrous sales business, with Bangladesh, South Korea and Turkey receiving the largest volumes.
The company's non-ferrous sales volumes bumped up by 9pc to 141mn lbs compared to the same period a year earlier, but down by 8pc from the prior quarter. Average sales prices for nonferrous fell to 58¢/lb from 72¢/lb year over year, even as it expanded its range of export partners from 12 countries to 16. Argus assessed zorba at around 53¢/lb cif China on average in the quarter, compared to 71¢/lb in second quarter 2018.
Vehicles purchased for the company's Pick-n-Pull automobile recycling subsidiary fell to 89,000 from 102,000 in the same quarter a year earlier.
Total operating profit for the auto and metals recycling division decreased to $22mn, down from $45mn in the corresponding quarter a year ago.
Schnitzer's finished steel volumes dropped to 94,000st, a 25pc decrease year over year in the second quarter 2019. The company cited low temperatures and consistent rainfall that inhibited construction projects in the Pacific northwest as a reason for lower steel sales.
Capacity utilization at Schnitzer's Cascade Steel and Scrap rolling mill dipped to 76pc from 83pc in second quarter 2018 and down from 87pc in the prior quarter.
But average selling prices rose to $737/st on continued reduced foreign steel imports. Last year's second quarter finished steel sales averaged $619/st, which predated the 25pc tariff on steel imports that began in March 2018.
The finished steel products division's profits climbed to $6mn versus $5mn in same time in 2018.
But Schnitzer's overall profit slimmed to $19mn against a $474mn revenue, decreasing by 42pc compared to $33mn made from a $559mn revenue in second quarter 2018.
