Scrap Industry News

In late September, India withdrew rules for scrap metal imports that went into effect in April after realizing their impracticality, Ikbal Nathani of Indian trading firm Nathani Group told attendees of the Bureau of International Recycling (BIR) Autumn Round-tables, held Oct. 22-23 in Warsaw, Poland.

The regulations stipulated that imports of unshredded scrap were only permitted from suppliers who had been registered by the government of India via the Director General of Foreign Trade (DGFT).

The regulations were introduced to safeguard metal recycling workers in India and underlined the country’s refusal to accept second-rate material.

Scrap consumers in India have encountered a number of problem shipments throughout the past year, including the inclusion of ordnance in some shipments.

"The DGFT and customs took a bold and courageous decision to scrap the regulation altogether," Nathani said. "This means you can freely export scrap to India," he added.

India imports more than $1 billion in scrap metal per year.

Sims Group Ltd., based in Australia, has reported un-audited net profit of $57.3 million for the quarter ended Sept. 30, a 16 percent decline based on the figure reported for the previous year. The figures do not include results from any Metal Management operations, as that merger will not be complete until early 2008.

Un-audited revenue increased by 7 percent from the prior corresponding quarter to $1.32 billion.

Jeremy Sutcliffe, Sims’ chief executive, says, "As previously advised, while the global environment for metals prices remained strong throughout the quarter, margin was adversely affected by high bulk ocean freight rates, a weak U.S. dollar and intensive buy price competition in most markets."

Sutcliffe also notes that the company’s sales volumes were below budget in light of shipping timing, adding, however, that they were in line with the prior corresponding quarter.

"Bulk ocean freight rates are at all-time highs, and the ability to adjust buying prices to reflect this has been impaired by the availability of cheap container rates in the same markets," Sutcliffe says. "This differential is likely to close over time, but, in the short term, the company is responding by shipping a significant amount of material in containers itself, using new rapid-loading equipment, and by increasing its push to secure material at source."

He adds that competition for raw material was intense for the quarter and is helping to fuel the company’s industry consolidation strategy.

Sims’ short-term strategy of maximizing container shipments will continue in the second quarter. Longer term, Sims says its consolidation strategy, its goal of securing more material at the source and technological improvements to enhance metallic recoveries are the best means of maintaining and enhancing margins.

Looking forward, Sutcliffe expresses confidence that markets for scrap metal will remain firm.

Icahn Enterprises L.P., New York City, has acquired all the issued and outstanding stock of Cleveland-based PSC Metals Inc. from Philip Services Corp. of Houston. The acquisition cost $335 million.

Icahn Enterprises is a diversified holding company that operates businesses in a wide range of industries, including investment management, real estate and home fashion.

PSC reported annual revenue of approximately $776 million and net income of approximately $45 million for the year ended Sept. 30.

Carl Icahn indirectly owns a 95.6 percent interest, and Icahn Enterprises indirectly owns the remaining 4.4 percent interest in Philip Services Corp.

The transaction was approved by a special committee of independent members of Icahn Enterprises’ board of directors. The special committee was advised by its own legal counsel and independent financial adviser with respect to the transaction.

More information on Icahn Enterprises is available online at www.icahnenterprises.com.

Chicago-based Metal Management Inc. has reported net sales of $715 million for the second quarter of fiscal year 2008 and net income of $17.8 million, with EBITDA (earnings before interest, taxes, depreciation and amortization) of $46.3 million.

The results could be the last full quarterly ones for Metal Management, which is scheduled to merge into Sims Group in early 2008.

Second quarter sales posted a 22 percent increase from figures for the same time last year. However, net income declined sharply from last year’s quarterly income of $29.1 million.

Metal Management processed and sold or brokered approximately 1.8 million tons of metal, a record for the company. This included record ferrous yard shipments of nearly 1.6 million tons and nonferrous shipments of approximately 126 million pounds.

The company turned its ferrous inventories approximately 12 times and its nonferrous inventories (excluding stainless and alloy scrap) approximately 10 times.

For the first six months of the fiscal year, Metal Management reports consolidated net sales of about $1.4 billion, an increase of 27 percent from figures the same time last year.

Net income for the first six months stood at $40.5 million, compared to net income of $74.0 million for the same time last year.

Daniel Dienst, chairman and CEO of Metal Management, says, "Our margins and overall profitability were impacted by tighter than normal ferrous yard spreads caused by continued aggressive competition for the purchase of unprocessed ferrous scrap metal and high export freight rates."

Dienst says Metal Management’s nonferrous business performed well during the company’s second quarter, but was affected by lower prices, particularly for nickel alloys, as well as sales disruptions for copper and aluminum into Southern China. Weaker demand for stainless steel, which had been a strong driver for Metal Management until the second quarter also had a negative effect on the nonferrous side of the business.

Newalta Income Fund has acquired the operating assets of Nova Pb Inc., Ville Ste-Catherine, Quebec.

Excluding transaction costs, Newalta paid $55 million, consisting of $45 million in cash with the balance paid by the issuance of 510,690 Newalta trust units. The transaction was completed Nov. 1, 2007.

"This acquisition further strengthens our business by diversifying our cash flows, expanding our service offering and enhancing our market presence in eastern Canada," Al Cadotte, president and CEO of Newalta, says.

Cadotte adds, "The addition of Nova Pb’s lead recycling operations complements our current recovery and recycling services for industrial customers across Canada, which includes recovering products such as crude oil, lubricating oils, water, fuels, hydraulic fluids, solvents and antifreeze."

Cadotte adds, "While the transaction is highly attractive on a stand-alone basis, there are numerous opportunities to drive improved performance by utilizing the facility’s excess capacity to process additional used batteries collected through our national network."

Newalta will continue to market the recycled lead using the ‘Nova Pb’ brand and now has more than 85 locations and 2,000 employees.

OmniSource Corp., Fort Wayne, Ind., has announced plans to invest nearly $9 million to replace its existing shredding operation at its Toledo, Ohio, scrap processing and metal shredding facility.

Plans call for the company to use more sophisticated technology to increase the recovery of recyclable metals. The facility will produce shredded steel product used as feed stock for regional steel producers.

The shredder will position OmniSource to remain regionally competitive and retain approximately 50 union and salaried positions within the city of Toledo, according to the company.

"On behalf of Lucas County, I’m happy to see that OmniSource will be keeping good-paying jobs here in our community and upgrading their facility to remain competitive in the long-term," Lucas County Commissioner Pete Gerken says.