Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Schnitzer Steel expects strong revenue results in FY21, despite lower margin in this fiscal year, driven by new technology investments. Between its two divisions, Schnitzer recycled almost 4.0mn mt of ferrous scrap and 551mn pounds of nonferrous scrap in FY20, down 8.5pc and 17.4pc against FY19, respectively. Rolling mill utilization rates averaged 96pc, up from from 91pc the preceding quarter. 


According to the group’s earnings release, total ferrous sales increased by 14.7pc to 1mn mt in Q4 FY20, compared to the preceding quarter while nonferrous sales were up 29pc to 72,121mt in the same comparison. Average ferrous sales prices increased by 1.7pc to $236/gt in Q4 FY20 while nonferrous sales price per pound remained rangebound at 55¢. 65pc of ferrous volumes were exported mainly to Turkey, Vietnam, and Bangladesh. The new Chinese regulatory changes, effective Nov 1, are expected to increase nonferrous exports to China in FY21. The use of electric arc furnaces is also expected to aid scrap demand. 


New technology investments in FY20 ($41mn) which will be finalized in FY21 ($59mn) are expected to improve the outcome in FY21. Advanced technologies deployed across recycling sites are expected to increase volumes and recovery grades. Another $60-66mn (capex) will be invested in FY21 towards maintenance.


The Auto and Metals Recycling (AMR) division contributed 76.3pc of total Schnitzer’s revenues as Cascade Steel and Scrap (CSS)’ part was 24.1pc. Volumes processed by AMR fell short by 11pc to 912,000gt in the last quarter of FY20 against 1bn gt in Q4 FY19. Finished steel sales by CSS in the same period under comparison rose by 3.7pc 139,000mt. Schnitzer Q4 2020 revenue fell by 15.1pc to $465mn over last year’s qaurter. For FY20 ended August 31, 2020, earnings declined by 19.7pc to 1.7bn compared with $2.1bn in FY19. Operating income in Q4 FY20 amounted to of $11mn, down 38.9pc against $18mn in Q4 FY19.





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