Schnitzer buoyed by stronger ferrous export demand

The Portland, Oregon-based company shipped 983 342 gross tonnage (999 123 t) of ferrous scrap in its fiscal third quarter ended 31 May, compared to 825 391 gt in the same quarter a year earlier.

The 19% increase was due to stronger export demand. Exports accounted for 70% of Schnitzer's ferrous shipments on the quarter at 690 019 gt, compared with 65% of ferrous shipments at 534 164 gt in the prior year.

Schnitzer Chief Executive, Tamara Lundgren, attributed the stronger export volume to "steady demand in west coast markets"; Bangladesh, Turkey and Thailand were the top export destinations for the company's ferrous shipments.

Domestic ferrous scrap volume was little changed at 293 323 gt.

Ferrous selling prices averaged US$337/gt fob, up from US$258/gt fob in the same prior-year period. Export selling prices increased by US$92/gt to US $347/gt fob, while domestic ferrous selling prices went up by US$51/gt to US$314/gt fob.

However, non-ferrous shipments fell down to 146 million lb from 150 million lb, which the company said was down to sales to China impacted by the later timing of the Chinese new year in 2018.

Average selling prices for non-ferrous metals rose to US74¢/lb on the quarter from US65¢/lb a year earlier. But prices for the shredded mixed metals product zorba softened "significantly" in May and continue to weaken in June following China's month-long suspension of the US arm of its scrap cargo pre-inspection and certification agency CCIC. China is the world's largest offshore consumer of US zorba.

Shipments to China continue to be hampered by enhanced inspections of US containers and higher import quality restrictions globally. Lundgren said that Schnitzer is responding to this by looking to alternative markets and developing processing technologies to produce smelter-ready material that does not need to be further refined in China or elsewhere.

Higher prices across ferrous and non-ferrous shipments helped boost operating profit in Schnitzer's auto and metals recycling segment by 83% to US$55 million. This represents US$56/gt ferrous shipped, up from US$36/gt ferrous shipped in the prior year and the highest level since the company's 2011 fiscal year.

Shipments in Schnitzer's finished steel segment changed little at 140 000 st, as higher rebar shipments offset a drop in coiled products.

Average selling prices for rebar and other finished steel products rose to US$703/st fob from US$545/st fob on higher raw materials prices and as import pressure waned amid the US imposition of a 25% tariff on imported steel.

Capacity utilisation at the company's Oregon rolling mill increased to 95% from 85% in the same year-earlier quarter.

Operating profit from finished steel sales rose up to US$11 million from US$1 million as rebar price increases exceeded those of scrap, boosting metal margins.

Schnitzer's group profit more than doubled y/y to US$38 million on revenue of US$652 million, up from a US$17 million profit on revenue of US$477 million in the prior year.

Read the article online at: https://www.drybulkmagazine.com/shipping/28062018/schnitzer-buoyed-by-stronger-ferrous-export-demand/