35 / Schnitzer Steel Industries, Inc. Form 10-K 2021 Strategic Priorities As we continue to closely monitor economic conditions, we remain focused on the following core strategies and plans to meet our business goals and objectives: Long-term expansion of ferrous and nonferrous scrap metal supply and processing, sales volumes, and operating margins; Technology investments and process improvements to increase the separation and recovery of metal materials from our shredding process and to expand product optionality; Development of new products and expansion of recycling services and capabilities to reach a broader market, enhance customer value, and increase operating margins; Increase market share through initiatives to maximize volumes and through selective partnerships, alliances, and acquisitions; Productivity and continuous improvement initiatives to ensure the safety of our employees, increase operating efficiency and effectiveness, advance sustainable business practices, improve natural resource stewardship, and reduce operating expense; Use of our seven deepwater ports and ground-based logistics network to directly access customers domestically and internationally to meet demand for our products wherever it is greatest; and Further optimization of our integrated recycling and steel manufacturing operating platforms to maximize opportunities for synergies, cost efficiencies, and volumes. Key economic factors and trends affecting the industries in which we operate We sell recycled metals to the global steel industry for the production of finished steel. Our financial results largely depend on supply of raw materials in the U.S. and Western Canada and demand for recycled metal in foreign and domestic markets and for finished steel products in the Western U.S. and Western Canada. Demand for most of our products is cyclical in nature and sensitive to changes in general economic conditions. The timing and magnitude of the economic cycles in the industries in which our products are used, including global steel manufacturing and nonresidential and infrastructure construction in the U.S., are difficult to predict. Global economic conditions, including impacts of the COVID-19 pandemic discussed below in this section, structural and cyclical changes in supply and demand conditions, the strength of the U.S. dollar, the availability and price of raw material alternatives, and trade actions such as tariffs affect market prices for and sales volumes of recycled ferrous and nonferrous metal in global markets and steel products in the Western U.S. and Western Canada and can have a significant impact on the results of operations for our reportable segments. In fiscal 2021, market conditions for recycled metals improved globally, with selling prices for many recycled metal commodities reaching multi-year highs during the fiscal year. Selling prices for our ferrous and nonferrous products increased significantly compared to the prior fiscal year which was negatively impacted by the effects of the COVID-19 pandemic. In fiscal 2021, the average net selling prices for our ferrous and nonferrous products increased by 61% and 60%, respectively, compared to the prior fiscal year. The deterioration in global economic conditions that occurred in fiscal 2020 in large part due to the impacts of the COVID-19 pandemic reflected among other things the curtailment of many commercial and government-sponsored activities using steel and other metal materials, causing metal commodity prices to decrease sharply and widespread destocking of inventories. As global economies revived and commercial and investment activities resumed, including throughout fiscal 2021, demand for recycled metals and finished steel increased substantially, which contributed to periods of sharp increases in market selling prices for these products. Increased focus on decarbonization strategies by governments and businesses around the world, including investments in infrastructure and technologies that minimize carbon dioxide emissions from the use of fossil fuels, among other factors, also contributed to strong demand for most of our products in fiscal 2021 and support global long-term demand for recycled ferrous and nonferrous metal. In fiscal 2021, we observed a trend of increased use of recycled metals to manufacture new products, including greater use of EAF technology for steel production which uses recycled metal as a primary raw material. Average selling prices for our finished steel products, which are produced in our steel mill using EAF technology, increased by 17% compared to the prior fiscal year.
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