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

                            Feb 23, 2023 - Opportunities in Expanded Metals
                            • Expanded metal – a niche in the overall metals manufacturing market – provides a cushion against extremes in metal market forces that may impact other sectors more, according to Metal Center News. Expanded metals are made from ferrous and nonferrous metal sheets that are cut and stretched for a variety of uses including security fencing, construction, architectural features, walkways, grates, grills, mesh, ventilation and filtration. Products may be raised or flattened, cold-rolled, hot-rolled or electro galvanized and may be made from steel, stainless steel, aluminum, titanium, brass and copper. The variably shaped openings, which include diamond, round, square and rectangular, allow air, light, heat and liquid to flow through. Expanded metal accounts for $300 to $400 million in a multibillion dollar industry according to Mike Gilboy, co-chairman of Expanded Metal Manufacturers Association. Security fencing and architectural uses are the biggest growth opportunities in the expanded metals market.
                            • North America’s largest metal service center, Reliance Steel & Aluminum, reported record sales of $17 billion in 2022, up almost $3 billion over the previous year, Metal Center News (MCN) reported in February. Reliance’s CEO Karla Lewis credited solid demand in most of the company’s end markets along with sustained higher metals pricing for the record rise in sales. Lewis also said product and end market diversification and a focus on servicing small order sizes helped drive sales. The company expects healthy demand trends to continue into the first quarter of 2023 despite macroeconomic uncertainty. Reliance expects its average selling price per ton sold for the first quarter of 2023 to be down 3% to 5% compared with Q4 2022, driven by stabilizing pricing trends for many of its products compared with December levels. The company has allocated a record $500 million toward capital expenditures in 2023, MCN reports.
                            • Analysts are forecasting further declines in steel plate prices early 2023, but the outlook for the rest of the year remains uncertain, according to steel plate products maker Leeco Steel. An analysis by the World Steel’ Association expects high inflation and rising interest rates to negatively affect steel demand this year, offset by federally-funded infrastructure projects, which should help to boost demand. Legislation supporting infrastructure projects is expected to impact steel demand over the next several years as funds are dispersed for new projects. The Inflation Reduction Act is expected to boost demand for steel products used in energy infrastructure. The 2021 Infrastructure Bill has already supported 29,000 new projects related to highways and bridges, and the number will go up as funds continue to be allocated, resulting in greater demand for steel products used in road and bridge infrastructure, according to Leeco.
                            • Metal service centers are poised 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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