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 6,800 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 Commodity Markets

Unpredictability in the metals commodity markets can affect costs, profitability, and product availability.

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 20 workers, and generates about $20 million annually.

    • The metal service center and distributor industry consists of about 6,800 companies which employ about 139,000 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 Steel & Aluminum, Metals USA, MRC Global, Ryerson, ThyssenKrupp Materials, and Samuel, Son & Co.
                            Industry Forecast
                            Metal Service Centers Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Nov 21, 2022 - Tariffs on Hot-Rolled Steel to Remain in Place
                            • The US International Trade Commission (USITC) in October decided to maintain the existing countervailing duty order on imports of hot-rolled steel from South Korea and the antidumping duty orders on imports of hot-rolled steel from Australia, Japan, Netherlands, Russia, South Korea, Turkey, and the United Kingdom. Those decisions were based on a five-year sunset review of the tariffs and found that US steel manufacturers would be hurt if the tariffs were removed. While good news for US steel makers, keeping the tariffs is bad news for metal customers and distributors. In a bit of good news for metal consumers, the USITC agreed to remove the existing antidumping duty and countervailing duty orders on imports of hot-rolled steel from Brazil, according to The Fabricator.
                            • The London Metals Exchange (LME) in November said it will not ban Russian aluminum and other metals because enough companies will still accept it in 2023 to prevent flooding the exchange’s storage sheds and dragging down prices, The Wall Street Journal reports. In late September, the LME – whose prices are considered the standard global prices for base metals – announced it was considering banning aluminum produced in Russia, a move that could have harmed Russia’s huge aluminum industry and created problems for international supply chains. The exchange feared that self-sanctioning by metal-consuming companies – including service centers – risked an influx of Russian aluminum into its warehouses, which could depress prices and erode confidence in the exchange. The news came as a blow to big aluminum producers in the West and some traders who had lobbied the LME to take action to ban Russian metals, Reuters reported.
                            • The construction industry – a major consumer of long steel products – is far behind the automotive sector when it comes to prioritizing sustainability, according to commodity price reporting agency Fastmarkets. “Green steel” – steel produced without creating CO2 emissions and by using fossil-free energy sources – initiatives have seen considerable uptake across flat products used by automakers, which are using green steel to achieve their net-zero emissions goals. However, the same can’t be said for construction companies, which haven’t been heard to have pledged to go green, or to have a green strategy, Fastmarkets reports. Unless the government creates legislation which means buyers have to fulfill a quota of green steel each year, construction companies are unlikely to do so.
                            • Metal service centers are likely to benefit from ongoing reshoring in the US manufacturing sector. The pandemic-induced disruption to global supply chains triggered a push by government and private industry to strengthen domestic manufacturing with long-term manufacturing growth dependent upon US competitiveness and reshoring. After decades of outsourcing manufacturing to countries such as China, India, and Mexico, more than 1 million jobs have returned to US shores over the past decade, with the pandemic accelerating the trend. Top industries for reshoring include transportation, computers and electronics, electrical equipment (including appliances), and apparel and textiles. Metal service centers will benefit from stronger demand for their products and services as these manufacturers source materials locally.
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