The scrap metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect from September to the end of December of 2010. In addition, sales increased substantially from the first six months of 2010 to approximately 62,000 MT in the first six months of 2011. The Company ended the quarter with 10,000 MTs of recycled scrap steel yet to be delivered. Management continues to believe that the secular shift to more environmentally friendly energy production materials and methods will drive the underlying demand for recycled steel.
In April and May of this year, China Armco sold 25,000 metric tons (MT) of recycled steel products to 3 customers. The Company has recognized approximately $14 million of net sales in its recycled steel business through the first two months of the second quarter. Approximately 80% of the tonnage sold in April and May were completed using pre-selling contracts. In addition, the Company recorded $7.1 million of revenue in its metal ore trading business. Client activity remained solid, as reflected in the 41,000 MT of metal ores sold during the first two months of the second quarter.
"Our recycling business picked up from a seasonally slow first quarter. We are seeing continued interest from customers to increase the amount of recycled metals purchased. So far this year, we have signed 2 new recycling customers who agreed to our pre-selling strategy. As we increase production and make further improvements in our operational efficiencies, we expect measured improvements in our profitability."
We expect a ramp up in sales in both our metal trading and recycling businesses under a backdrop of robust steel production and demand across China. Developing strong relationships with strategic customers and suppliers such as Mineracao Usiminas S.A., will enable us to fully leverage our operating model to generate incremental revenue and profitability.
The metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect since September. During the first quarter, which ended March 31, the Company sold approximately 14,435 tons of processed scrap steel. The Company currently serves nine clients, several which it also presents on the trading business, and is establishing itself as a quality producer. Management continues to believe that the secular shift to renewable raw material sources and government quotas imposed on steel producers will drive underlying demand for recycled steel. Furthermore, the Company expects to ramp production in its Texas Shredder throughout the remainder of 2011 as it adds new customers and gains more experience in metal recycling production. Enhanced capacity utilization is expected to have a positive variance on margins.
Management began migrating its metal recycling customers to a pre-sold model starting in January 2011. Under this new sales strategy, customers pay China Armco 100% of the total purchase price in advance by issuing a commercial bill from related bank, thereby locking in a set volume and price. This allows the Company to use the proceeds to pay for raw materials, thereby reducing its working capital needs and providing enhanced visibility into future production volumes. Seven customers have transitioned to the pre-selling model so far, and the Company continues to actively solicit existing and new customers.