Portland, Oregon-based Schnitzer Steel Industries, Inc. announced Wednesday its outlook for Q3 of fiscal 2013 ending May 31, 2013. Schnitzer said that ferrous export selling prices declined steadily throughout Q3 with market prices at the end of May approximately $50 per ton lower than at the end of Q2 of fiscal 2013 driven primarily by lower export demand. The combination of declining selling prices, continued constrained supply trends, and lower tax benefits are expected to result in sequentially lower consolidated net income.
In the Metals Recycling Business, ferrous sales volumes are expected to increase 5 to 10 percent. Operating income per ferrous ton is expected to be in the range of $6 to $8, which includes a significant adverse impact from average inventory costs as compared to Q2. Absent the impact from average inventory accounting, operating income per ferrous ton was in line with Q2.
In the Auto Parts Business, seasonally stronger car purchases, admissions and part sales, and the incremental volume contribution of acquisitions, are expected to result in an increase of approximately 10 percent in revenues from Q2 of fiscal 2013. Car purchase volumes are expected to increase sequentially by approximately 9 percent. APB's operating margin, excluding the impact of new locations added since Q1, is expected to be approximately 12 percent, a sequential increase over the second quarter's performance.
In the Steel Manufacturing Business, average selling prices are expected to decrease slightly Q2 while sales volumes are expected to be approximately 30 percent higher due to gradually improving end markets in Q3, and scheduled maintenance and seasonally lower sales which occurred in Q2. Operating income is expected to be approximately breakeven in Q3.