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Schnitzer Adjusts
3rd Quarter Earnings Guidance

April 29, 2004 — Schnitzer Steel announced that it anticipates significantly higher operating income for its fiscal 2004 third quarter ending May 31, 2004.

In its second quarter earnings release, issued on April 1, 2004, Schnitzer had estimated its third quarter 2004 operating income would be in the range of $38 million to $43 million. However, in the past two weeks the company's third quarter outlook has improved based upon increased visibility of market factors, including sales prices and volumes coupled with lower-than-anticipated raw material and freight costs for both its wholly-owned and joint venture metals recycling businesses, and stronger demand for finished steel.

Based upon the revised forecast, Schnitzer estimates that its fiscal 2004 third quarter operating income will be 40 to 50% above the range previously provided. Although the company does not normally update its outlook during the quarter, it is making an exception to its policy to share this significant update with investors.

Consumption of recycled metal remains strong throughout the world. Market prices for recycled ferrous metal have declined from the record levels reported in March 2004, but continue to remain well ahead of the average prices reported by the company during the first half of fiscal 2004. The company's third quarter margins are further benefiting from a reduction in its cost of unprocessed metal and lower ocean freight rates.

Schnitzer’s finished steel business is also seeing improving consumption for all of its product lines. Third quarter-to-date sales volumes are ahead of management's previous estimates. Anticipated third quarter price increases are being attained and additional price increases for rebar and wire rod have been announced to take effect for May 2004 and June 2004 shipments, respectively.

As expected, the Auto Parts Business is experiencing seasonably strong retail demand and the integration of its three new Canadian stores is going well and is on pace with the acquisition plan.

As always, it's difficult to predict with certainty the outlook for the company's future financial performance, especially looking out beyond 60-90 days. However, the company continues to believe that the underlying fundamentals for its business are strong. Based upon current information, Schnitzer estimates that fourth quarter 2004 operating income will be significantly higher than the $24.8 million reported in last year's fourth quarter.

Schnitzer Steel Industries, Inc. is one of the nation's largest recyclers of ferrous metals, a manufacturer of finished steel products and a leading self-service used auto parts retailer. The company, with its joint venture partners, processes approximately 4.9 million tons of recycled ferrous metals per year. In addition, the company's steel mill, Cascade Steel Rolling Mills, has an annual production capacity of approximately 700,000 tons of finished steel products. The company and its joint venture partners operate primarily along the West Coast and Northeastern seaboard of the United States.

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