NEW YORK Horsehead Holding Corp. returned to profitability in the first quarter after posting four consecutive quarterly losses as soaring zinc premiums more than offset lower shipment volumes, the Pittsburgh-based zinc producer and electric-arc furnace dust recycler said.
In the first quarter, Horsehead saw zinc product shipments drop 14.9 percent year over year to 42,772 tons, largely due to a decision to build inventory ahead of its scheduled transition to its new smelter site in Mooresboro, N.C., later this year. The new facility, announced in 2011 as the replacement site for its existing Monaca, Pa., zinc smelter, remains on schedule for startup in the second half of 2013, president and chief executive officer James Hensler said on the companys May 6 earnings call.
"In terms of the inventory, we would expect to build something on the order of about 8,000 to 10,000 tons of inventory, mostly metal, with a portion of that being oxide, between now and the end of the third quarter," Hensler said of the companys stockpiling efforts.
But while shipments were down in the first quarter to build stock ahead of the upcoming relocation, those lower volumes were sold at a higher average price of $1.04 per pound, up from 95 cents per pound in the year-ago quarter, the company said. Those higher prices reflect stronger realized zinc premiums, rather than any change in the London Metal Exchange zinc price, the company said.
In the first quarter, Horseheads realized premiums on zinc metalprimarily a reflection of contract salesaveraged 5.8 cents, up 2 cents from the first quarter of last year, the company said. Realized premiums for zinc oxide in the quarter were about 12 cents per pound, an increase of 10 cents compared with the prior years first quarter, it said.
The company said it operated its zinc smelting facility at full capacity during the first quarter. However, that changed in April, when the company idled one of its smelting furnaces due to the unplanned shutdown of two special-high-grade zinc columns and one oxide refining column, the company said in outlook commentary accompanying its first-quarter results. The columns are expected to be back online in May, with the Monaca smelter then expected to run at full capacity straight through until its final shutdown later this year.
In the three months ended March 31, Horsehead reported net income of $2.8 million vs. a net loss of $8.5 million in the same quarter a year ago on sales of $118.3 million compared with $111.4 million in the same quarter of 2012.