Service Centers
September 13, 2015
Secondary Service Centers Report a Squeeze in the Non-Prime Markets
Written by John Packard
SMU has been canvassing secondary flat rolled steel service centers and brokers around the United States to see how the secondary markets are faring in the current market conditions. We had an extended conversation with a Chicago based distributor who told us that the current market is all about “staying power.”
What this executive meant was with the long sustained decline in flat rolled steel prices in both prime and secondary, service centers have been losing money on almost every load they have been shipping out the door. This is due to buying steel at “X” price and a few weeks later that same steel is now worth “X minus” the original number. This devalues their inventory and the only choice they have is to move off the higher priced inventory at whatever price they can get for it. We were told, “Inventory values keep going down and I have to sell into that.”
