During Thursday's quarterly earnings conference call, Portland, Oregon-based metals recycling and steel manufacturing company, Schnitzer Steel Industries said that during fiscal Q3, global demand spurred higher sales volumes and selling prices in the metals recycling sector. Ferrous scrap selling volumes totaled 1.46 million long tons in Q3, compared to 1.1 million long tons in Q2, and 1.18 million long tons in Q3 2010. Despite higher sales volumes, and significantly higher total revenues (metals recycling revenues were $879 million in Q3 compared to $618 million in Q3 2010), operating income fell on a year-on-year basis from $53 million in fiscal Q3 2010 to $46 million in fiscal Q3 2011.
Schnitzer's ferrous scrap export sales prices peaked in February of 2011 to over $500/long ton and have remained stable at about $470-$500/long ton since. Domestically, while scrap prices and scrap demand were strong throughout the quarter, scrap activity was slower in April and May due to US domestic natural disasters and power outages that swept a number of states in the spring. Going forward, Schnitzer's President and CEO Tamara Lundgren said that the company expects the scrap market to remain strong and prices to remain stable and approximate Q3 levels.
Lundgren also noted that Schnitzer sent ferrous scrap to 18 different countries in Q3, with the main recipients being, Korea, China and Turkey.
During the question-and-answer portion of the conference call, Schnitzer executives were asked what they see in terms of scrap demand from China, especially considering the rolling blackouts. Lundgren said that the company continues to see very strong demand from China, and demand is certainly not falling off--China was one of the main recipients of Schnitzer's ferrous scrap exports in fiscal Q3.
Additionally, Lundgren said that because of the lack of scrap supply coming out of Japan following the March 11 earthquake and tsunami, China and Korea have been sourcing more scrap from the US market. And while Schnitzer has not yet seen the impact of the reconstruction in Japan, reconstruction efforts are expected to be a "positive for our business," added Lundgren.