Schnitzer Steel, one of the largest recyclers of scrap metal in the USA, has announced its quarterly results for Q1 CY’21. Schnitzer’s metals recycling facilities collect, broker, process and recycle metal both ferrous and non-ferrous. The key highlights of the investor conference call are –
- Ferrous sales volumes down slightly in Q1 CY’21 –Ferrous sales volumes were slightly down in Q1’21. This was primarily driven by the impact of severe weather conditions in February which jeopardized shipments. It was further aggravated by the non-availability of containers.
- Chinese scrap consumption to crude steel production ratio – Electric arc furnace steelmaking, which uses scrap as its primary raw material, has been expanding and is projected to increase further. In China, scrap usage in steelmaking is expected to increase by 50% from current levels or over 100 mt by 2025, driven by additional EAF capacity as well as by the increased use of scrap in their BOF.
- Mexico, Bangladesh and Peru remained topmost export destinations – Mexico, Bangladesh and Peru remained the major destinations in Q1. Export customers accounted for 60% of total ferrous sales volumes in 1Q’21. Export sales to the Americas represented almost 1/3 of the total volume, which was a record for that region.
- Average selling price fell in Q1 CY’21 – The sharp increase in selling prices during the quarter contributed to the Company’s strong margins, while ferrous sales volumes were impacted by severe weather, which affected the timing of shipments.
- Strong cashflow increased profitability in Q1’21 – Operating cash flow in the Q1 CY’21 was positive. Cash flows associated with increased profitability more than offset the increase in working capital resulting from the higher price environment.
Outlook – Expect seasonally-driven improvement in scrap supply flows and solid demand for finished steel products based on spring construction season and resilient West Coast markets.
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