US metals recycler Schnitzer Steel anticipates lower ferrous and nonferrous scrap prices to continue into the first quarter of next year.
The company today attributed falling scrap prices to slower worldwide economic growth, extended customer destocking, mill outages, and trade and regulatory challenges with China.
Schnitzer's auto and metals recycling division saw profit per ferrous ton drop by $11/t to $22/t in its fiscal fourth quarter ended 31 August, while its average ferrous sales price decreased by $51/gt to $270/gt compared to the same quarter a year ago.
Profit per ferrous ton fell by $20/t to $26/t in the fiscal year ended in August. Average ferrous sales prices declined by $28/gt to $289/gt versus the prior year.
Ferrous volumes inched down to 1.02mn t compared to 1.03mn t in the fourth quarter 2018. Ferrous volumes rose to 3.74mn t in 2019 versus 3.71mn t in 2018. Schnitzer plans to increase ferrous tonnages by 700,000t by 2021.
Schnitzer's ferrous exports represented 74pc of total ferrous sales tonnages, with Vietnam, Turkey and South Korea receiving the most shipments.
Average nonferrous sales prices decreased to $0.56/lb in the fourth quarter from $0.69/lb a year ago. For the full year, average nonferrous sales prices fell to $0.59/lb from $0.72/lb in 2018.
Nonferrous volumes for the fourth quarter declined to 160mn lbs from 167mn lbs a year earlier. Annual nonferrous volumes increased to 608mn lbs from 572mn lbs year over year.
Schnitzer will roll out upgrades to its nonferrous recovery efforts in early 2020 to improve copper recovery, and automated heavy media zorba separation that will convert zorba to furnace-ready twitch, brass, zinc, stainless steel, and copper.
Schnitzer will install the advanced recovery technology at five locations on both coasts. The installation is expected to cost $75mn-85mn, with full implementation by first half 2021. The company expects additional income of $8 per ferrous ton in the first half of 2021, and around half that in 2020.
The company's recycling segment is expected to operate at near-break even profit levels in the first quarter 2020 with ferrous ton profits expected to fall by $8/gt because of inventory accounting, lower ferrous volumes and prices, and continued declining zorba prices.
Schnitzer's steelmaking division Cascade Steel reported lower profit on the quarter, down to $6mn from $14mn a year earlier. Reduced selling prices for finished steel products outweighed increased volumes from west coast construction projects and decreased steelmaking raw-materials costs, the company said.
Steel volumes sold rose to 134,000st in the quarter, up from 127,000st a year ago. But average finished steel sales prices slid to $675/st from $741/st in the same period.
Annual volumes dropped to 478,000st from 519,000st in 2018. Averaged finished steels sales climbed to $713/st from $666/st a year ago.
Schnitzer's fourth quarter income declined to $18mn from $38mn in the prior year. Total year income fell to $84mn from $149mn in 2018.
