O'Neal Steel Competition
Now Viewing O'Neal Steel's competition in: Steel Distribution (primary)
Recent Developments
Steel Mills Cutting Output - Weak steel demand is leading many North American steel producers to reduce output in late 2008, according to American Metal Market. Steel distributors expecting lower demand for steel are placing fewer orders. US Steel is expected to temporarily idle one of two Canadian blast furnaces, and Nucor is shutting an Alabama sheet steel mill for short periods due to declining demand.
Steelmakers Accused of Price-Fixing - Five class action lawsuits were filed against six major US steelmakers between September 1 and October 10, 2008 for alleged price-fixing. Collusion by steelmakers to set steel prices may result in higher cost of goods sold for steel distribution companies. Plaintiffs allege that the defendants met to adjust production rates to keep steel prices from dropping. Experts say that the lawsuits may be combined into a single action at some point during litigation.
US Auto Sales Decline Continues - US auto sales, a demand driver for steel, fell 27 percent in September 2008 compared to September 2007, according to Autodata. It was the biggest year-over-year decline in sales since January 1991. Tight credit markets and increasing US economic weakness are cited as key causes of the decline.
Competitive Landscape
The health of the manufacturing and construction industries drives demand for steel. A distributor’s sales volume determines profitability because many costs are fixed. Large distributors benefit from economies of scale in purchasing, processing, and distribution. Small companies can compete by specializing in particular products or offering special processing services.
Steel Distribution Industry Forecast
from Hoover's/D&B subsidiary First Research
The domestic demand for US primary ferrous metals, an indicator for steel distributors, is forecast to increase at an annual compounded rate of 5.2 percent between 2008 and 2013.
Ferrous Metal Demand Growth Uneven
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Opportunity Rating
The First Research Opportunity Rating is First Research's estimate of industry performance vs. industry risk over the next 12 to 24 months.
- Demand: Partly tied to construction activity
- Need efficient inventory management
- Risk: Slow economy cuts demand
Industries Where O'Neal Steel Competes
- Metals & Mining
- Steel Service Centers (primary)
- Industrial Manufacturing
- Metal Fabrication
