Sims says weak market conditions remain

Australia-based Sims Ltd., which operates more than 200 recycling facilities in North America, Australia, New Zealand and the United Kingdom, says market conditions will make profits hard to come by in its current financial quarter.

In a notice from the Sims board of directors to investors regarding its fiscal year 2024 first quarter, which ends Sept. 30, the metals and electronics recycling company reiterates the market challenges it first described in a mid-August notice.

“August management accounts are now nearing completion and, when combined with September trends, it is clear that weak market conditions have not abated," Sims says.

Those conditions appear poised to fully erode profits. “As a result of these market conditions, the company anticipates first quarter fiscal year 2024 earnings before interest and taxes [EBIT] to be approximately breakeven, subject to usual market dynamics including timing of shipments and the final purchase price for scrap to fulfill those shipments," the company adds.

The board’s closing message to investors is that the medium and long terms look brighter, saying, “The company remains confident in the medium and long-term fundamentals of the business. This confidence is grounded in the following factors that will drive medium to long-term demand for recycled metal: metal-intensive infrastructure spending; global decarbonization of steelmaking, including the growth of electric arc furnaces [EAFs]; and the electrification of products that are currently carbon intensive.”

In mid-September, Sims also held an investors day event, which included a tour of the Terminal Island SA Recycling ferrous scrap export yard in California. (Sims is a joint venture co-owner of SA Recycling).

In a presentation slides accompanying that event, Sims cites data from the Brussels-based World Steel Association (Worldsteel) forecasting the demand for ferrous scrap globally to rise to more than 1.14 billion metric tons by 2039. That would be a more than 75 percent rise in annual demand from the 646 million metric tons consumed last year.

The increased demand, according to Worldsteel, would arise from greater EAF market share globally, from about 24 percent now to closer to 40 percent by 2040. The organization also anticipates remaining basic oxygen furnaces (BOFs) will use a higher percentage of scrap by 2040.