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                                  EXHIBIT 10.25

                            THIRD AMENDMENT TO LEASE

           THIS THIRD AMENDMENT TO LEASE ("Amendment") is made and entered into
this _____ day of February, 1998, by and between SCHNITZER INVESTMENT CORP. (the
"Lessor") and SCHNITZER STEEL INDUSTRIES, INC. (the "Lessee). Each may be
referred to from time to time as a "Party" and collectively as the "Parties."

                                    RECITALS

         A.       Under that certain Lease Agreement (the "Lease") dated
September 1, 1988, as amended by an Amendment of Lease dated July 2, 1990, and
Second Amendment of Lease dated October 28, 1994, which are, with the Lease,
incorporated by this reference, Lessor leased certain Premises to Lessee at
International Terminals, Portland, Oregon, as described in the Lease.

         B.       The Leased Premises include Yard Storage, which is defined in
the Lease.

         C.       Lessee desires to terminate the Lease with respect to 4.55
acres of Yard Storage (the "Surrendered Premises").

         D.       Lessor is agreeable to terminating the Lease with respect to
the Surrendered Premises, pursuant to the terms of this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, it is agreed by the Parties as follows:

         1.       Upon payment in full of all obligations then due and owing to
Lessor, Lessee shall be relieved of all further obligations for the Surrendered
Premises under the Lease, effective at midnight on February 28, 1998, PROVIDED
all other obligations imposed on Lessee under the Lease are satisfied prior to
its surrender of the Surrendered Premises.

         2.       Lessor waives its right to any Termination Damages, as
described in the Lease, on account of Lessee's surrender of the Surrendered
Premises.

         3.       Effective March 1, 1998, Lessee's monthly rent for the Leased
Premises will be $85,114.25.

         4.       To the extent Lessee occupies any portion of the Surrendered
Premises after February 28, 1998, it will remain responsible, with respect to
the portion so occupied, for payment of rent and for all other obligations
imposed upon it under the Lease. To the extent Lessee completely vacates any
portion of the Surrendered Premises prior to February 28, 1998, its rental
payment will be reduced by the portion so vacated.

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         5.       Lessor is not relieving Lessee of Lessee's responsibility, if
any, for claims, damages, losses, costs of expenses (including reasonable
attorney fees through trial and on appeal) which are attributable, in whole or
in part, to the storage, use, disposal or presence of any Hazardous Materials
(as defined in Section 18.1 of the Lease) on the Surrendered Premises during the
Lease.

         6.       Except as modified in this Amendment, the terms of the Lease
remain unmodified and in full force and effect.

         IN WITNESS WHEREOF, the Parties have executed this Third Amendment to
Lease as of the date first written above.

LANDLORD                                 TENANT

SCHNITZER INVESTMENT CORP.               SCHNITZER STEEL INDUSTRIES, INC.

By: /s/   Linda M. Wakefield             By: /s/ J.W. Cruckshank
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Title:   Vice President                  Title:  Corp. Controller
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