Schnitzer Steel Industries (NASDAQ:SCHN) joined the chorus of U.S. steel companies trumpeting blowout profits yesterday. The company, which recycles ferrous metals, manufactures steel, and sells auto parts salvaged from wrecks, more than doubled its second-quarter 2003 earnings in the second quarter of fiscal 2004, posting $0.89 per diluted share on revenues that increased less than 30%.

One interesting fact that you will find in the company's earnings announcement is that Schnitzer's greatest sales increases were right here in the U.S. Over the past several months, economists have been blaming Asia, and in particular China, for "sucking up all the extra steel around the world." Yet, Schnitzer CEO Robert Philip characterized Asian demand as only "good."

It is also interesting to read that Schnitzer is not relying solely on the world's steel deficit to drive profitability. For like most other intermediate-stage steel makers, Schnitzer now has to pay higher prices for the steel scrap it processes. Eventually, its steel inventories will be depleted and its gross margins will contract. Perhaps in anticipation of this inevitable decrease in steel profitability, the company has expanded its "Pick-N-Pull" auto parts division.

So, in sum, Schnitzer is doing well. Its shareholders will be glad to hear that.

What may be more interesting to investors generally, though, is some information contained in the release that was not mentioned by the other steel companies that released earnings over the past couple of weeks, including Reliance Steel (NYSE:RS), Steel Technologies (NASDAQ:STTX), Nucor (NASDAQ:NUE), Steel Dynamics (NASDAQ:STLD), and Textron (NYSE:TXT). Buried in the paragraph about Schnitzer's metals recycling business is a clue to where steel prices have been trending most recently.

Schnitzer noted that its prices for steel exported overseas did not increase as sharply as its prices for domestic steel sales. Why not? Because "overseas" is far away, and it takes time to ship stuff there. Consequently, overseas orders are placed, and prices on overseas orders are set, further ahead of shipment date than are domestic orders -- in fact, two to three times further ahead.

Consider: If two orders for the same volume and grade of steel are placed, but order X is placed 60 days before order Y and order X is priced more cheaply than order Y, this hints at the direction steel prices are heading (or were heading at last report). And judging from Schnitzer's numbers, where those prices are heading is up.

Tom Gardner is constantly looking for overlooked and undervalued small companies. Check out his newsletter, Motley Fool Hidden Gems , free for 30 days.

Fool contributor Rich Smith has no interest in any of the companies mentioned in this article. The Fool has a disclosure policy .