Schnitzer posts loss, bullish on scrap rebound

US metal recycler and steelmaker Schnitzer Steel expects rising ferrous scrap demand from Turkey will boost its profits after it posted a loss in the prior quarter.

The Oregon-based company said exports to key consumer Turkey slumped in the first quarter of its fiscal year ended 30 November as scrap prices reached multi-year lows. Improving demand has since helped boost Turkish prices above $300/t cfr--about $80/t off of lows seen in October 2019--lifting US export prices on both the east and west coasts where Schnitzer operates bulk export locations.

In its latest quarter, 40pc of Schnitzer's volumes were shipped to Asia, with 14pc to Turkey, 38pc shipped in the US and the remaining 8pc to other countries in the Americas.

Schnitzer posted a $7mn loss as lower scrap prices impacted its first quarter earnings, down from a $16mn profit during the same period a year earlier.

Its auto and metals recycling division posted a loss of $3/gt.

Domestic ferrous scrap selling prices fell by a third to $195/gt, while export prices fell by 27pc to $229/gt.

Sales of ferrous scrap in the US fell by 27pc to 247,000gt, while export sales edged up by less than one percentage point to 583,000gt.

Total nonferrous volumes fell by 14pc to 132mn lbs from a year earlier amid a "continued structural shift in demand for certain nonferrous products" driven by China, including shredder byproduct zorba. Average nonferrous sales prices fell by 8pc to 54¢/lb.

Sales volumes for Schnitzer's Cascade Steel and Scrap division, which includes a bar mill, fell by 5pc to 114,000 short tons (st) compared to a year earlier. Rolling mill utilization fell by two percentage points to 85pc. Average sales prices dropped by 14pc to $643/st.

By Rye Druzin