Steel Service Centers Market Size, Share & Trends Analysis Report By Application (Metal Fabrication & Machine Shops, Heavy Industry, HVAC, Oil & Gas), By Region, And Segment Forecasts, 2019 - 2025

Industry Insights

The global steel service centers market demand was estimated at 593,474.2 kilotons in 2018 and is anticipated to expand at a CAGR of 3.5% from 2019 to 2025. The establishment of new steel service centers in various countries to cater to the manufacturing sector is projected to drive growth.

Many companies are establishing new steel service centers around the world, especially in North America. For instance, in 2018, Nippon Steel & Sumikin Bussan Corporation and Pacesetter Steel Service, Inc. jointly announced the establishment of a new facility in Houston, Texas to cater to the demand for flat-rolled steel products in the U.S., as ongoing trade issues have increased the demand for locally manufactured products. In 2019, JFE Shoji Trade Corporation entered into a joint venture with PROLAMSA to promote sales of steel products for the automotive industry in Mexico.

The U.S. has been a leading consumer of steel and related products and is projected to maintain its position in the forthcoming years. Increasing investments in mills coupled with rising preference for local manufacturing is expected to bode well for the growth of the steel service centers market. After the imposition of 25% tariffs on imports of steel, shipments in the sector observed growth of nearly 5% in 2018. On the other hand, imports were down by 13.5% in the same year compared to 2017.

Steel Service Centers (SSCs) are known for processing steel and other alloy materials such as aluminum plate in some cases. Some of the SSCs also deal with recycling scrap and metal alloy materials. SSC industry is an unorganized sector and is not focused on specific metals, such as aluminum and steel, rather they cater to oil and gas, plumbing, and other such industries.

The key role of the steel service centers is to deliver customized materials to manufacturers as per their requirements. The primary functions of these centers are inventory management, processing, supply, and financing. SSCs procure the materials from mills and after storing they sell these materials to fabricators as per the requirement. Some of the specialized and value-added services offered by the SSCs include miller cutting, cambering, plate burning, and tee-splitting.

Application Insights

In 2018, metal fabrication and machine shops, heavy industry, consumer appliances, and ground transportation were the leading segments with double-digit market shares. Among all applications, heavy industry accounted for the highest market share of 27.8% in 2018. The growth of this segment is attributed to the increased demand for machinery and equipment in construction, mining, and chemical sectors.

The ground transportation segment is likely to expand at a CAGR of 3.9% over the next seven years. Auto manufacturers are under pressure to meet stringent environmental policies. Automakers focus on reducing the weight of vehicles to improve fuel efficiency. This likely to augment the demand for new materials, such as advanced high strength steel in the forthcoming years. This is also anticipated to boost the production volume of new types of vehicles, such as fuel cell vehicles and hybrid and plug-in electric vehicles.

The consumer appliance segment is projected to benefit from the emerging middle-class population particularly in Asia Pacific. Steel has extensive use in consumer electronics and household items, such as refrigerators, washing machines, microwaves, cookware, and utensils among others. As per the World Data Lab, the global middle-class income population is anticipated to increase by 1.7 billion by 2030. With a growing population, product demand in the industry is projected to grow at a lucrative pace over the coming years.

Regional Insights

Asia Pacific held the largest market share in 2018 and is likely to maintain its position during the forecast period. The growth is led by increasing industrial output in China, India, Japan, and South Korea. Projects such as smart cities initiative and industrial corridors are anticipated to benefit long-term growth in the steel market in India. However, short-term challenges such as the automotive sector slowdown in 2019 could hinder the market growth for a short period.

North America is projected to expand at a CAGR of 3.4% from 2019 to 2025. The imposition of tariffs on steel has led to the reopening of mills and service centers in the country. Furthermore, factors such as moderate demand for passenger and commercial vehicles and increased production of aircraft are likely to drive the regional market growth in the forthcoming years.

Europe has the presence of several automotive manufacturers who procure large volumes of steel products. Many research institutes and organizations are looking for the development of lightweight materials, such as advanced high strength steel products. The positive outlook of the construction sector is another key aspect that is anticipated to contribute to market growth.

Steel Service Centers Market Share Insights

Fabricators generally do not purchase directly from steel mills due to the minimum quantity requirement of steel in terms of bundles or weight. This helps them achieve the economies of scale as buying large quantity can be inefficient and too expensive for them. SSCs help these fabricators optimize the operations through the Just-in-Time (JIT) inventory model. The establishment of new facilities and capacity expansion are the key growth strategies adopted by the market players.

Some of the leading companies include Reliance Steel & Aluminum Co, Samuel, Son & Co., Ryerson Holding Corporation, Russel Metals, Tata Steel, ThyssenKrupp Materials Processing Europe GmbH, Voestalpine Steel & Service Center GmbH, Mahindra Intertrade Limited., VDM Metals GmbH, and Baosteel Group.

Report Scope

Segments Covered in the Report

This report forecasts volume growth at the global regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global steel service centers market report based on application and region:

• Application Outlook (Volume, Kilotons, 2014 - 2025)

  • Metal Fabrication & Machine Shops

  • Heavy Industry

  • Consumer Appliances

  • HVAC

  • Food Processing & Agriculture

  • Oil & Gas

  • Ground Transportation

  • Others

• Regional Outlook (Volume, Kilotons, 2014 - 2025)

  • North America

    • The U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • Central and South America

    • Brazil

  • Middle East & Africa