Bullish sentiment within the US ferrous scrap market should persist this year, following four straight months of domestic price increases, due to tight supply conditions and strong export demand, Schnitzer Steel CEO Tamara Lundgren said April 5.
Lundgren said greater export opportunities are highlighted by scrap demand in Turkey for steel rebar production as the country looks to rebuild infrastructure following the February earthquake.
“Recently, the Turkish government announced the country’s need for 5 million mt of steel to support those efforts in the Iskenderun region, which implies a need for around 6 million mt of ferrous scrap,” Lundgren said during Schnitzer’s earnings call with analysts for its fiscal second quarter ended Feb. 28. “We expect that, even accounting for Turkish domestic scrap generated by earthquake cleanup activities, Turkey scrap imports should rise materially to meet this need.”
Domestically, scrap and rebar demand should also be supported by projects tied to the US Bipartisan Infrastructure Law, she added.
On the scrap supply side, Lundgren said ongoing tightness is likely to continue due to low import volumes and weak domestic manufacturing activity, the latter of which would lead to lower scrap generation.
The daily Platts TSI US Midwest shredded scrap index was assessed at $510/lt on a delivered basis April 4. The assessment has risen consistently each month since prices bottomed out in 2022 at $365/lt in November.
Schnitzer acquires metals recycler
Lundgren said Schnitzer acquired ScrapSource, a metals recycling management services and solutions provider, in March to support its efforts of increasing scrap processing volumes and shipments in North America.
“[The acquisition] will enable us to scale our national accounts platform, enhance services to our national manufacturing and retail customers, increase supply flows to our operations and create expansion opportunities in new regions,” she said.
The acquisition continues a trend of expansion for Schnitzer, which also bought assets from Columbus Recycling in 2021 and Encore Recycling in 2022.
Higher scrap sales achieved in quarter
Schnitzer’s ferrous scrap shipments during its fiscal Q2 reached 1.26 million lt, up from 851,000 lt in its fiscal first quarter and 1.07 million lt in its prior-year fiscal Q2. This was largely attributable to the resolution of operational disruptions that impacted the company’s shredders in Oakland, California, and Everett, Massachusetts, over the past several quarters, according to Lundgren.
The Portland, Oregon-based metals recycler and finished long steel producer posted a $4 million income on sales of $756 million in its fiscal Q2, compared with a $38 million income on sales of $783 million in its prior-year quarter.
Post time: Apr-11-2023