Schnitzer to pass rising costs onto scrap suppliers

Market: Metals
13/04/22

US metal recycler Schnitzer Steel will implement a facility fee applied to all ferrous and nonferrous materials purchased at its locations, effective 15 April, in an attempt to address rising operating costs.

The facility fees will vary by geographic location because of the differing costs of compliance and requirements to meet regulatory standards throughout the country.

Suppliers surveyed by Argus said that the fee schedules received from Schnitzer over the last two weeks have varied, with the facility fee for ferrous scrap heard between $5-10/gross ton (gt) with the higher end applied to suppliers on the west coast. For nonferrous, added costs were reported at 1¢/lb.

In a letter to suppliers, the Portland, Oregon-based recycler said that over the last decade heightened environmental regulations have led to higher operating costs as it has invested in new equipment, emissions reduction technology and stormwater management infrastructure.

Last year, Schnitzer warned that stricter regulatory requirements for hazardous waste in California could severely impact its shredding and recycling operations in the state, increase operating costs and limiting operation flexibility.

Still, scrap suppliers largely have balked at the move, calling into question its effectiveness, equity and shelf life.

Schnitzer did not respond to an Argus request for comment.

The added fees have market participants concerned about other large suppliers potentially taking a similar approach as costs across the supply chain have climbed over the last year.

Others said new fees could prompt some suppliers with geographic options to shift sales elsewhere or invest in processing equipment to upgrade material.

Schnitzer operates metal recycling facilities across 25 US states, Puerto Rico and western Canada and has seven deep water export facilities located on both the east and west coasts and in Hawaii and Puerto Rico.

Schnitzer posted a $38mn profit in its fiscal second quarter ended 28 February, down from a profit of $46mn a year earlier and off from $47mn in the first quarter.

By Brad MacAulay

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