NEW YORK Schnitzer Steel Industries Inc. is gearing up to start its new shredding operation near Vancouver, British Columbia, within the next three months, and anticipates a sequential improvement in its fiscal second-quarter earnings results, the company said Feb. 28.
Portland, Ore.-based Schnitzers metals recycling business in February "successfully commenced the testing of its newly constructed shredder," which is "expected to be operational in the (fiscal) third quarter," the company said in an outlook for the fiscal second quarter ended Feb. 28.
Ferrous scrap export selling prices strengthened throughout the quarter, with prices for February shipment about $40 per gross ton higher than at the end of its fiscal first quarter. Domestic selling prices weakened slightly toward the end of the quarter, Schnitzer said.
Scrap supply continues to be constrained by low U.S. gross domestic product growth, resulting in high raw material costs, which will temper the overall improvement in margins. During the fiscal second quarter, average ferrous scrap net selling prices increased slightly from the fiscal first quarter and volumes rose between 15 and 20 percent.
The combination of higher selling prices and volumes is expected to generate operating income from its ferrous scrap division of approximately $12 per tondouble that of the first quarter.
Average selling prices for nonferrous scrap are expected to finish in line with fiscal first-quarter results, while volumes are expected to increase about 10 percent, the company said.
Higher commodity prices, stronger car purchases and an incremental volume contribution from acquisitions are expected to result in a quarter-on-quarter revenue increase of about 10 percent in Schnitzers auto parts business.
In the companys steel manufacturing business, average selling prices are also expected to increase slightly from the fiscal first quarter while sales volumes are expected to drop nearly 25 percent. Higher costs for raw materials, a lower utilization rate resulting from planned maintenance and a typical seasonal slowdown in demand are expected to result in operating income of about $1 million for its steel manufacturing business, Schnitzer said.