Schnitzer Steel Industries Inc. posted its best third-quarter earnings on record thanks to high prices and strong demand for both ferrous and nonferrous scrap.
The Portland, Ore.-based scrap recycler and long steel producer recorded net income of $76 million in the third quarter of its fiscal 2022 ended May 31, 2022, doubling earnings of $38 million sequentially, and a 17% gain over earnings of $65 million posted in the same quarter last year.
Revenue was $1.01 billion in the third quarter, up 29% from $783 million quarter-on-quarter (QoQ) and up 23% from $821 million year-on-year (YoY), according to earnings data released on Wednesday, June 29.
The company said it benefited from strong global demand for recycled metals and a robust West Coast market for finished steel products. Results also reflected average selling prices at or near multi-year highs for ferrous and nonferrous, while average finished steel selling prices were the highest on record.
Schnitzer in addition saw increased contributions from its acquisition of Encore Recycling at the end of April. The Georgia-based recycling facility also boasts the company’s first shredding operation in the Southeast. The move increased Schnitzer’s regional footprint to 24 facilities across five Southeast states.
The region is expected to see major expansion in steelmaking, auto, and industrial manufacturing in the coming years, the company said.
“Our record results this quarter reflected excellent operational performance during a quarter marked by strong movements in demand and prices, reflecting both short-term disruptions and underlying positive structural trends supporting increased use of recycled metals in manufacturing,” said nTamara Lundgren Schnitzer chairman and CEO.
Ferrous sales volumes of $1.13 billion in Q3 of fiscal 2022 were down 7.1% YoY but up 5.4% QoQ. Nonferrous sales volumes of $201 million were up 28.8% and 36.7%, respectively over the same period. The positive results were achieved by strong global demand, the company said.
Average ferrous net selling prices were up 35.5% and 15.5% YoY, respectively, while nonferrous net selling prices were up 21.% and 1.8% QoQ, respectively. Finished steel sales volumes, though up 27.4% QoQ, were down 11.8% YoY – a reflection of ongoing logistics challenges, particularly the concrete industry drivers’ strike in Seattle, which resolved in April.
Average net selling prices for finished steel products were up 40.8% compared with the year-ago quarter, the highest prices on record, the company said.
Lundgren noted that recycled metals – which are less carbon-intensive than mined metals – provide the necessary solution for a steel industry focused on decarbonization and the increased use of recycled ferrous metals in steelmaking. “Our investments in advanced metal recovery technology systems and the expansion of our operating platform are providing us with recycled ferrous and nonferrous products that can serve this increasing demand.”
Schnitzer is one of the largest manufacturers and exporters of recycled metal products in North America with operating facilities located in 25 states, Puerto Rico and Western Canada. Its steel manufacturing operations produce finished steel products, including rebar, wire rod and other specialty products. Schnitzer has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico.
By David Schollaert, David@SteelMarketUpdate.com
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