Schnitzer Steel: Robust demand increases Q2FY22 sales volume, outlook positive

Schnitzer Steel Industries Inc, one of the largest manufacturers and exporters of recycled metal products, reported its results for the second quarter of fiscal year 2022.

The company's performance in this quarter continued to benefit from strong world-wide demand for recycled metals and robust West Coast market conditions for finished steel products. Average selling prices for ferrous and non-ferrous recycled material were at multi-year highs in the quarter, while average finished steel prices reached an all-time high, but the sales volumes declined y-o-y, as per the company's report.

Tamara Lundgren, Chairman and Chief Executive Officer, Schnitzer Steel Industries Inc, stated, "After delivering record first quarter results, our second-quarter performance continued the trend of strong financial and operating performance leading to first half results that were the highest in our company's 116-year history.

After the end of the quarter, the launch of GRN Steel(TM) was announced, a line of net zero carbon products from the company's Cascade steel mill which reflects evolving customer demand and to build tomorrow's essential infrastructure.

Highlights of the investor conference call

• Ferrous scrap transaction up 10% y-o-y: Sales volumes of ferrous scrap in Q2FY22 went up significantly by 10% to 1,071,000 tonnes (t), supported by strong global demand. Bangladesh, Turkey and Vietnam were the prominent exporting destinations for scrap shipments. Export customers accounted for 62% of total ferrous sales volumes in 2QFY22.
  
  

• Non-ferrous supply up 8% y-o-y: Strong demand pushed the average price for non-ferrous metals to a multi-year high by 33% y-o-y. Meanwhile, the company's sales volume went up by 8% y-o-y to 147,000 t. The company sold scrap to 17 countries in this quarter.
  
  

• Increasing EAF share in steel production to boost scrap usage: EAF steelmaking capacity in the US is expected to rise sharply by over 10 mnt by 2024. In the EU, there is renewed focus on using more scrap in EAFs, with a renewed planned capacity up to 15 mnt. China targets to increase its share of EAFs to around 15% of total crude steel production by CY25. These developments will boost scrap usage in the coming years, according to Schnitzer's recent quarterly report.
  
  

• Finished steel prices hit all-time high: Average selling prices for finished steel reached the highest levels. However, 2QFY22 finished steel volumes were impacted by supply chain disruptions, including delay in construction projects. However, prices went up by 7% from 1QFY22 as the mill completed its ramp-up and rebuilt its inventory during the quarter.
  
  

Outlook:
Seasonally driven improvement in supply flows and strong global demand are expected to drive higher Q3 ferrous and non-ferrous sales volumes. Solid demand for finished steel products based on spring construction season and robust West Coast markets are expected to drive higher finished steel sales volumes.