Steel Mills
Schnitzer Sees Weak Demand Hit Q1 Earnings
December 20, 2022
Schnitzer Steel expects to swing to a loss in its fiscal first quarter ended Nov. 30 due to weak demand.
In preliminary results released Dec. 19, the Portland, Ore.-based scrap recycler and long steel producer said it expects a net loss in the range of $18–20 million in its 2023 first quarter, on ferrous sales volumes of 851,000 tons.
During the same quarter a year ago, the company reported net income of $47 million and ferrous sales volumes of 1.15 million tons, when Schnitzer recorded its best-ever first-quarter results.
Schnitzer said it expects diluted loss per share from continuing operations to be in the range of $0.64–$0.69 in the quarter.
Demand slumped in its first quarter, as the company cited global concerns, including slower growth, the impact of China’s Covid lockdowns, inflationary pressures, the strength of the US dollar, and steel inventory destocking.
Schnitzer said it expects average net selling prices for ferrous, nonferrous, and finished steel prices to be down sequentially by 12%, 14%, and 9%, respectively, in the quarter, while ferrous and nonferrous sales volumes are expected to slide 33% and 12% sequentially.
The company said results were impacted by approximately $18 million, $21 per ferrous ton, from extended operational disruptions at the Everett, Mass., and Oakland, Calif., metals recycling facilities, resolved in November.
“These disruptions, together with tight supply flows from the lower price environment and weaker economic activity, resulted in significantly lower sequential ferrous sales volumes,” Tamara Lundgren, Schnitzer chairman and CEO, said in a statement.
Lundgren added that with these disruptions behind them, the company is expecting significant improvement in second-quarter results.
“Looking beyond current market conditions, we believe the structural demand for recycled metals remains positive, supported by the transition to low carbon technologies, the increased focus on decarbonization, and the expected funding related to the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions,” Lundgren said.
The company will report financial results for its fiscal 2023 first quarter ended Nov. 30 on Thursday, Jan. 5.
By Ethan Bernard, Ethan@Steelmarketupdate.com
Latest in Steel Mills
US mills increase shipments in January
AISI reported a 4.1% rise in US steel mill shipments from December to January.
Reports: Algoma Steel halts US shipments, plans layoffs in wake of tariff war
Facing an uncertain tariff trade war, Algoma Steel took action this week, halting steel shipments to the US, laying off employees, and prepping for an unknown future, according to local media reports.
Ancora asks USS to delay shareholder meeting until after Nippon deal wind-down date
The investment firm seeking to oust U.S. Steel’s leadership has asked the steelmaker to schedule its annual shareholder meeting after June 18. That’s the deadline set by the US government for USS and Nippon Steel to unwind their nearly $15-billion merger deal. Ancora Holdings Group sent a letter dated Feb. 27 to board members of […]
Algoma Steel temporarily idles blast furnace, local news reports
"We experienced an event at the blast furnace which required a controlled shut down to facilitate repairs," a spokesperson said.
Global steel output rises in January
Global crude steel output rose 5% from December to January but still lagged last year.