Top 100 Metals Service Centers: Buyers sourced record $67 billion in metals from distribution giants
The biggest processing and distribution firms controlled 47% of $156 billion metals supply network in 2008.
By Tom Stundza -- Purchasing, 4/30/2009 2:00:00 AM
Click here for the Top 100 Metals Service Centers
Even though they bought substantially fewer tons in 2008, record high prices for metals through the middle of last year forced buyers to spend an all-time high amount of money for steels and nonferrous metals from service centers. In fact, buyers spent a record $66.6 billion with the Top 100 metals service centers in North America in 2008, a solid 9.5% increase over the previous adjusted high of $60.8 billion in 2007.
Interestingly, the value of metals bought increased even though buyers in various metalworking industries sourced 15% less steel, aluminum and brass mill products through service centers than the previous year. In fact, the 2008 total of 48.7 million net tons distributed in 2008, as reported by various service center industry associations, compares with 57.3 million tons in 2007 and 61.3 million tons shipped in 2006.
Overall, Purchasing calculations show that the U.S. and Canadian metals distribution industry generated $153 billion in 2008 net sales, or about 7% more than the $143 billion generated in 2007. As double-digit first-half price increases for metals dissipated in the second half, 70% of the Top 100 companies had an increase in sales between 2007 and 2008, the lowest percentage since 2003. The Top 100 service centers generated 47% of the distribution industry's total revenues. Actually, the 20 largest service centers generated 33% of the entire industry's revenues—and 76% of the sales of all Top 100 firms.
Service centers comprise the largest single customer group for North American mills, buying and reselling more than 43% of all the carbon, alloy, stainless and specialty steels, aluminum, copper, brass and bronze, and superalloys produced in the U.S. and Canada last year. However, the metals distribution industry remains highly fragmented and competitive even though ownership consolidation has reduced the number of parent companies to around 1,200 firms operating 3,300 distribution sites—down from 1,300 firms operating 3,500 branches in 2003.
As some firms have disappeared into other firms, other companies have taken their place—and grown in annual sales. In fact, 19 of the Top 100 service center companies posted sales last year in excess of $1 billion. Still, as the face of the metals distribution industry has continued to change, buyers have been forced to adjust to new owners, managers and product offerings. A prime example is PNA Group Inc. of Atlanta, a $1.6 billion/year flat-rolled steel service center organization that was ranked tenth in the 2007 listing but is gone this year—as it has since been absorbed into the Reliance Steel & Aluminum universe of processing and distribution companies.
Reviewing the biggest service center chains, the number one company supplying metals to buyers in North America remains Reliance Steel & Aluminum with $8.72 billion in 2008 sales revenues, up from $7.26 billion in 2007. The Los Angeles-based firm continues to pull away from Ryerson of Chicago, which reported $5.3 billion in sales, down from $6 billion the year before.
The third-largest metals distributor, McJunkin Red Man Corp. with joint headquarters in Tulsa, Okla. and Charleston, W.Va., had sales of $5.2 billion a year after the merger. In 2007, pro forma sales of McJunkin and Red Man Industries had been $3.95 billion. Fourth and fifth place went to Canadian firms Samuel, Son & Co. of Mississauga, Ontario, with sales of $3.22 billion (up from $3.15 billion the year before) and Russel Metals, also of Mississauga, Ontario, with sales of $3.15 billion (up from $2.4 billion).
O'Neal Steel Inc. of Birmingham, Ala., jumped into sixth place with 2008 sales $2.93 billion (up from $2.5 billion in 2007) while a corporate reorganization and reduced demand for copper, aluminum and aerospace-grade nonferrous metals dropped 2008 sales for ThyssenKrupp Materials North America to $2.9 billion from $3.2 billion in 2007. In eighth place was Macsteel Service Centers USA of Newport Beach, Calif., at $2.2 billion (up from $1.9 billion), followed by Metals USA Inc. of Houston at $2.04 billion (up from a revised $1.71 billion) and Carpenter Technology Corp.'s Distribution Division in Reading, Pa., at $1.95 billion (up from a readjusted $1.94 billion in 2007).
The next group of nine metals service center giants with 2008 sales in excess of $1 billion were Namasco Corp. of Roswell, Ga., ($1.86 billion, up from $1.56 billion in 2007); Steel Technologies of Louisville, Ky. ($1.6 billion, up from $1.31 billion); Worthington Industries of Columbus, Ohio, ($1.58 billion, up from a revised $1.38 billion); A.M. Castle & Co. of Franklin Park, Ill. ($1.38 billion, up from a revised $1.31 billion); Edgen Murray Corp. of Baton Rouge, La. ($1.25 billion, up from $925 million); Olympic Steel of Bedford Heights, Ohio ($1.23 billion, up from $1.03 billion); Marmon/Keystone Corp. of Butler, Pa. ($1.2 billion, up from a revised $1.12 billion); Alro Steel Corp. of Jackson, Mich. ($1.15 billion, up from $1.02 billion); and Steel Warehouse Co. of South Bend, Ind. ($1.05 billion, up from $668 million partly because of its buyout of Cleveland's Chesterfield Steel).
Click here for the Top 100 Metals Service Centers
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