Schnitzer Sees Weak Demand Hit Q1 Earnings

In preliminary results released Dec. 19, the Portland, Ore.-based scrap recycler and long steel producer said it expects a net loss in the range of $18–20 million in its 2023 first quarter, on ferrous sales volumes of 851,000 tons.

During the same quarter a year ago, the company reported net income of $47 million and ferrous sales volumes of 1.15 million tons, when Schnitzer recorded its best-ever first-quarter results. 

Schnitzer said it expects diluted loss per share from continuing operations to be in the range of $0.64–$0.69 in the quarter.

Demand slumped in its first quarter, as the company cited global concerns, including slower growth, the impact of China’s Covid lockdowns, inflationary pressures, the strength of the US dollar, and steel inventory destocking. 

Schnitzer said it expects average net selling prices for ferrous, nonferrous, and finished steel prices to be down sequentially by 12%, 14%, and 9%, respectively, in the quarter, while ferrous and nonferrous sales volumes are expected to slide 33% and 12% sequentially. 

The company said results were impacted by approximately $18 million, $21 per ferrous ton, from extended operational disruptions at the Everett, Mass., and Oakland, Calif., metals recycling facilities, resolved in November.

“These disruptions, together with tight supply flows from the lower price environment and weaker economic activity, resulted in significantly lower sequential ferrous sales volumes,” Tamara Lundgren, Schnitzer chairman and CEO, said in a statement.

Lundgren added that with these disruptions behind them, the company is expecting significant improvement in second-quarter results.

“Looking beyond current market conditions, we believe the structural demand for recycled metals remains positive, supported by the transition to low carbon technologies, the increased focus on decarbonization, and the expected funding related to the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions,” Lundgren said.

The company will report financial results for its fiscal 2023 first quarter ended Nov. 30 on Thursday, Jan. 5.

By Ethan Bernard, Ethan@Steelmarketupdate.com