Metalico reports loss for first quarter

Metalico Inc. has reported a net loss of $10.9 million for the first quarter of 2015, compared to a net loss of $3.9 million for the same time last year and a loss of $6 million for the prior year. Metalico also has reported sales of $75.9 million, compared to $118.5 million for the first quarter of 2014.

The company says its results were affected by a sharp decline in ferrous scrap prices, which reduced inventory valuations and virtually eliminated margins on ferrous sales for the quarter. In addition, Metalico pointed to lower inflows and outbound volumes and lower average nonferrous commodity selling prices for the loss.

Nonferrous pricing was affected by the continued strength of the U.S. dollar and weakening demand from Asia, which translated into a rise in finished metals products imported into the United States.

Prices for aluminum, copper and other nonferrous metals have trended lower from the start of the year, Metalico says, although they have not experienced the degree of decline ferrous prices have seen. A recent change to Chinese export taxes has resulted in more finished and semi-finished aluminum exported into the United States. These imports will likely keep supply ample, offsetting demand from scrap from the automotive sector and driving prices lower, according to Metalico.

Despite the challenging environment, the company says it sees some positives. Demand for steel is growing in nonresidential and infrastructure construction, a segment that has been depressed since the 2008-2009 financial crisis. Although the increase has been modest, the uptick in activity is beginning to offset the weakness in the energy segment resulting from the collapse in energy prices that has slowed domestic exploration and production.