Scrap Industry News

QUARTERLY SALES LOWER FOR METAL MANAGEMENT

Metal Management Inc., Chicago, has announced results for its third fiscal quarter ended Dec. 31, 2005, that mark a decline from the figures the company reported in the third quarter of the previous year.

The company reported net sales of $395 million, a decline from net sales of $447.6 million for the third quarter of the previous year. Metal Management reported a profit of $15.3 million for the quarter, compared to $29.5 million during Q3 of the previous year.

During its third quarter, Metal Management handled about 1.2 million tons of metal—about 1.1 million tons of ferrous scrap and 124 million pounds of nonferrous material.

For the first nine months of its fiscal year, the company reported consolidated net sales of $1.2 billion, essentially unchanged from sales the same time in 2004. Metal Management also reported net income of $37.7 million for the first nine months of its fiscal year, compared to net income of $76.1 million during the first three quarters of its previous fiscal year.

"Metal Management delivered strong results in the third quarter despite challenging ferrous market conditions evidenced by a volatile pricing environment in the U.S. and weak international demand," Daniel Dienst, the company’s chairman, CEO and president, says.

"Operational excellence and diversification are two important differentiators for Metal Management, helping us deliver solid results even in very difficult market conditions," Dienst says. "The company’s performance this quarter once again demonstrated the importance of rapidly turning inventories to limit the impact of price fluctuations and the strategic value of our diversified product offering and geography."

Metal Management notes that domestic demand for ferrous scrap metal was relatively strong throughout its third fiscal quarter. Pricing remained volatile, however, demonstrating the importance of Metal Management’s approach to rapidly turning inventory, according to the company.

In response to weakness in demand from export markets, Metal Management says it leveraged its operational flexibility and distribution network to take advantage of more favorable U.S. markets.

Nonferrous markets, which account for about 30 percent of Metal Management’s sales, benefited from robust pricing. "The considerable units of copper, aluminum and nickel that we process balance our exposure to the steel markets," Dienst says. "This diversification is an important part of our business strategy."

He adds that Metal Management anticipates processing nearly 475 million pounds of nonferrous scrap metal at the completion of its fiscal year.

The company also reports that Southern Recycling LLC, in which Metal Management has a 28.5 percent interest, is now nearly fully recovered from the operational damage caused by Hurricane Katrina and is well-positioned to assist with the recycling and recovery challenges in New Orleans and the Gulf Coast region.

Metal Management also completed a number of capital improvement projects during the period. "In the third quarter we finished the installation of our Gamma-Tech metal analyzer in Memphis and completed the installation of state-of-the-art metal recovery technology at six shredding facilities, bringing the number of these plants across our system to eight."

Dienst concludes, "With our competitive advantages—scale, locations, diversity of mix, technologies, balance sheet and employees—Metal Management is well-positioned for growth and success."

Australia-based Smorgon Steel Group Ltd. has acquired the operating assets of the American company ITI Inc. and its Steelport of Florida Inc. yard.

ITI operates a metal recycling business with collection and processing facilities in Norfolk, Va., and Tampa, Fla. The two yards handle about 100,000 metric tons of ferrous scrap annually.

"Our stated corporate strategy includes the expansion of our metal recycling business both within the Asia–Pacific region and into more mature markets," Smorgon Steel’s Managing Director and CEO Ray Horsburgh says. "The ITI business meets our strategic criteria and represents our second major presence in metal recycling outside Australia."

Shane Grice, CEO of Smorgon Steel Recycling, says, "The ITI acquisition is attractive in its own right, and we believe the longer-term outlook for metal recycling globally, combined with our plans for the business, will increase returns over the next few years."

ITI’s current management team will remain in place, reporting to Grice.

COZZIS RE-ENTER SCRAP BUSINESS

Albert Cozzi, former CEO of Cozzi Iron & Metal and Metal Management Inc., and his brother Frank Cozzi, national chair-elect of the Institute of Scrap Recycling Industries Inc. (ISRI), have joined with four other members of the Cozzi family to launch Cozzi Consulting Group, to be based near Chicago in Burr Ridge, Ill.

The new sales and management consulting firm will specialize in the marketing of scrap metal, paper and plastic. "The average manufacturer only uses about 80 percent of the material it buys to produce its primary products," says Al Cozzi. "Our primary focus is going to be sales consulting for industrial accounts and assuming the responsibility for them of marketing their scrap byproducts."

He notes that the service will start with a waste and recycling audit. "We’ll look at every type of recyclable our customers have to make sure they are getting the best deal," Cozzi comments. "As we decided to go into this, we asked ourselves what we really do well. We think we’re the best in the country at selling scrap."

The establishment of the new consulting firm marks the re-entry of Al and Frank Cozzi into the scrap metal industry following a two-year non-compete agreement the duo had with their former employers at Metal Management Inc.

Al Cozzi admits that he has "been playing a lot of golf" during the two-year span of the non-compete, but says he is now looking forward to getting back to business. "I’ve missed dealing with our customers and can’t wait to get back to work," he remarks.

Greg Cozzi, Anthony Cozzi, Dorese Goldsmith and Terri Freeman are among the other Cozzi family members to join the firm.

WTSA HIKING RATES FOR SCRAP METAL

Container shipping lines operating from the United States to Asia have announced plans to increase freight rates for metal scrap shipments and to limit the "free time" allowed for delivery of cargo and return of container equipment in China.

Effective Feb. 15, member lines in the Westbound Transpacific Stabilization Agreement (WRSA) raised metal scrap rates to all Asian destinations by $150 per 40-foot container and by $120 per 20-foot container. Carriers also planned to limit free time at Chinese destination points to 12 calendar days, after which equipment detention charges will begin to accrue.

Scrap metal was the second largest containerized cargo moving from the United States to Asia last year, with more than 235,000 TEUs (20-foot equivalent units) shipped during the first nine months of 2005.

WTSA carriers say their plans to limit free-time allowances are an effort to improve equipment availability and recover delay-related costs resulting from China’s licensing regulations. Those rules cover overseas exporters of scrap material and shippers who send loads of material before lining up a buyer in China.

ISRI SENDS OUT SAFETY PLEDGE

The chair and the president of the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, have distributed a safety pledge to the group’s membership, asking members to send a "single, unified message" committing to safety.

An e-mail that went out to ISRI members in early February asks recipients to sign and send to the ISRI office a pledge to commit to "providing a safe and healthful workplace" to employees and to "consider worker and customer safety" in every decision made.

In a letter accompanying the pledge, ISRI Chair Joel Denbo and ISRI President Robin Wiener state, "Signing the pledge is not mandatory as a condition of membership, but it is a prerequisite to qualify for many (though not all) ISRI Safety programs and services."

Among the services that will remain available at no charge only to those that sign the pledge are OSHA 10-hour training, monthly safety meeting training guides, the ISRI Safety Manual and ISRI’s safety posters.

The duo also write that, "ISRI’s Safety Program is built on a simple safety truth: Safety is just as manageable as every other element of our business." The letter also notes that to be so managed, safety must be a top priority. "Accomplishing this change of priorities requires a wholesale commitment to put safety at the top of the management chart in all our activities—even above profit," the letter states.

Denbo and Wiener close the letter by saying that the pledge is a first step in what will be a plan to allocate "additional resources" to ISRI’s safety program.