Metal Service Centers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 6,400 metal service centers in the US process, store, and distribute metals for end use in a variety of industries. Companies may specialize in a particular type of metal or serve a specific industry. Service centers offer finished products in many forms, including sheets, plates, beams, bars, angles, and tubes.
Volatile Metals Prices
Metal prices are volatile due to fluctuations in foreign and domestic production capacity, raw material availability and related pricing, metals consumption, tariffs, import levels into the US, governmental regulations, and the strength of the US dollar relative to other currencies, among other factors.
Developing Retail Opportunities
Some metal service centers are combining wholesale operations with retail to generate incremental revenue.
Industry size & Structure
A typical metal service center or distributor operates out of a single location, employs 22 workers, and generates about $22 million annually.
- The metal service center and distributor industry consists of about 6,400 companies which employ about 140,000 workers and generate about $142 billion annually.
- Most companies are small, independent operators - about 74% have a single location and 77% employ less than 20 workers.
- Customer industries include manufacturing, fabrication, construction, transportation, agriculture, energy, automotive, appliance/HVAC, architecture, heavy equipment, defense, and machinery.
- Large companies include Reliance, Inc. (formerly Reliance Steel & Aluminum), Reliance subsidiary Metals USA, MRC Global, Ryerson, ThyssenKrupp Materials, and Samuel, Son & Co.
Industry Forecast
Metal Service Centers Industry Growth
Recent Developments
May 23, 2024 - Prices Sink Amid Falling Sales
- Producer prices for metal and mineral wholesalers sank 13.3% in March compared to a year ago after falling 1.5% in the previous annual comparison, according to the latest US Bureau of Labor Statistics data. Sales for metals and minerals distributors declined 18.1% in March year over year but ticked up 1.1% from the prior month, according to the Census Bureau. Sales for the US metal service centers industry are projected to grow at a 3.0% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to a forecast by the Interindustry Economic Research Fund. Meanwhile, employment by the industry grew 1.9% in March year over year, while average wages rose 3.4% over the same period to $29.52 per hour, down from their peak in February, BLS data show.
- The closure of one of the US’s last primary aluminum smelters in late January is sparking fears of an aluminum shortage in the US, Steel News reports. The shutdown of the Magnitude 7 Metals plant in Missouri, which was capable of supplying up to 30% of the nation’s aluminum needs, was the third closure of a US aluminum plant in less than two years, leaving the US with just four. The surprise closure threatens the US’s clean energy transition because aluminum is used in everything from airplanes and cars to solar panels and electric transmission lines. The Mag 7 plant closure highlights one of the major challenges facing the aluminum industry: high electricity costs, as smelting requires near-constant electricity at high volumes. Appeals have been made to the Biden administration to restart the plant as a matter of national security.
- Aluminum service centers could benefit from legislation introduced in Congress in January that would hold aluminum producers accountable for charging a tariffed price on non-tariffed metal, according to a press release from the office of its sponsor Rep. Ken Buck of Colorado. The False Claims Enhancement Act (H.R. 7078) clarifies that it is a violation of the False Claims Act for a party – such as an aluminum producer – to falsely charge a tariff in a private contract where no tariff is owed and the proceeds are not paid to the government. Prices charged by producers of aluminum sheet, plate, and foil have eased after spiking in 2022 when high energy prices vastly increased the costs of manufacturing aluminum.
- Less is more when it comes to material handling, according to Metal Center News’ (MCN) Materials Handling Report. The movement of metal through a modern metal service center relies increasingly on automation, the benefits of which include moving products faster and more efficiently, decreasing opportunities for damage to occur, improving safety, and reducing reliance on hard-to-find labor. “The less frequently you have to touch it, the faster it gets out the door to your customers,” says Jason Clark, president of Canrack Storage Systems, adding “There’s a lot less likelihood you’ll make mistakes or have damage to the product,” MCN notes that material handling equipment providers are stepping up by creating equipment that handles much of the load for the operators, including the need to handle longer and wider material. Automated storage, racking, and retrieval systems are the next step in the evolution of material handling, per the MCN report.
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