Metal Service Center Outlook for 2015

April 5, 2015 / , , , ,

Like most sectors of the metal-cutting industry, metal service centers are hoping that experts are right about the growth prospects for 2015. After 2014 fell short of expectations and with recent data showing less than favorable numbers, most companies are trying to stay optimistic about the months ahead.

Shipments Down
The latest figures from the American Iron and Steel Institute show that February steel shipments from U.S. steel mills were down 10.8 percent compared to January 2015 and decreased by 9.1 percent compared to February 2014. Shipments year-to-date were down 5.3 percent compared to 2014 shipments.

According to data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments declined in the first three months of 2015 compared to the same months in 2014, although March shipments were only down by a tenth of a percent. Shipments of aluminum products, on the other hand, increased in both February and March after being down in January. Meanwhile, steel and aluminum inventories grew in the first three months of 2015, MSCI reports.

Cautiously Optimistic
Even with a rough start to the year, analysts remain optimistic that there will be growth in 2015. As we reported in our 2015 Industrial Metal Cutting Outlook, forecasts for steel demand are positive, but growth rates will not be as strong as they were in 2014. According to the Short Range Outlook 2014-2015 from the World Steel Association (worldsteel), U.S. steel demand is expected to increase by 1.9% in 2015—much lower than the 6% growth the U.S. experienced in 2014. Globally, worldsteel forecasts that global apparent steel use will increase by 2.0% this year.

Many industry leaders are also fairly optimistic about this year. In a mid-February statement announcing its 2014 financial results, Reliance Steel & Aluminum Co. said that it expects the U.S. economy to continue to improve throughout 2015. The Los Angeles, CA-based service center believes high levels of metal being imported into the U.S. will continue given the strong U.S. dollar and weaker economies in other parts of the world, which will continue to put downward pressure on steel prices. In addition, due to normal seasonal trends and an improving demand environment, Reliance expects higher tons sold in the first quarter of 2015 versus the fourth quarter of 2014, but lower average selling prices and margins.

OEM Outlooks
Of course, no one really knows how this year is going to shake out. Perhaps the greatest gauge for how metal service centers might fare in 2015 is to look at segment forecasts. Below are outlooks for three OEM categories that will likely play a large role in determining demand in 2015: