Schnitzer Provides Market Outlook for First Quarter of Fiscal 2013

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PORTLAND, OR--November 27, 2012:Schnitzer Steel Industries, Inc. announced today its market outlook for its first quarter of fiscal 2013. During the first half of the quarter, both export and domestic sales prices for ferrous metals dropped approximately $50 per ton from August levels driven by significantly lower domestic utilization rates and the weak economic conditions globally which continued to adversely impact overall steel demand. Domestic selling prices recovered toward the end of the quarter. Export sales prices lagged the domestic market slightly, strengthening in November for December shipments. Current export sales prices have nearly recovered to August levels. During the quarter, the supply of scrap continued to be constrained by low US GDP growth, and supply volumes were negatively impacted by the lower price environment.

“Management's Discussion and Analysis of Financial Condition and Results of Operations”

In our Metals Recycling Business, ferrous average net selling prices are expected to decline approximately 5% from the fourth quarter of fiscal 2012. Ferrous sales volumes are expected to decline approximately 20% due to softer demand resulting from the economic uncertainty, reduced flows of raw materials and timing of shipments. Nonferrous average selling prices are expected to increase approximately 5% while volumes are expected to decline approximately 30% from the fourth quarter. Operating income per ferrous ton is expected to be $4, approximately 60% lower than the fourth quarter of fiscal 2012, due to the declining trend in selling prices, the impact of constrained supply volumes on production costs and the timing of shipments.

In our Auto Parts Business, the drop in commodity prices is expected to result in a decline of 5% in revenues from the fourth quarter of fiscal 2012. First quarter operating margin is expected to increase to approximately 8% due to lower average inventory costs and normal seasonal improvements in our retail operations, including higher admissions, which more than offset the impact of lower ferrous and nonferrous selling prices.

In our Steel Manufacturing Business, average selling prices and volumes are expected to be in line with the fourth quarter. Steady market conditions, combined with reduced costs of raw materials, are expected to result in operating income of approximately $3 million.

Strong progress on cost reductions is continuing and we are on track with our restructuring program announced in August to lower pre-tax operating costs by approximately $25 million annually. However, corporate expense in the first quarter is expected to be slightly higher sequentially as a result of $2 million of nonrecurring benefits in the fourth quarter and higher intercompany profit eliminations due to the timing of shipments. For the first quarter, net income is expected to be in the range of break-even before pre-tax restructuring charges of $2 million. Actual financial performance may be materially different based on, among other factors, market conditions and the timing of shipments.

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