Rising demand from downstream markets will benefit industry profit
Los Angeles, CA (PRWEB) October 31, 2013
The Metal Wholesaling industry is one of the largest industries in the United States, despite being severely hammered by the recession. Wholesalers and service centers supply metal products to almost every manufacturing and construction industry. The economic downturn hit these downstream buyers hard, and they are currently in various stages of recovery. According to IBISWorld Industry Analyst Kerry Coughlin, “Residential and commercial construction values are still below 2008 levels, as is demand from fabricated metal product manufacturing.” However, automobile, aerospace and machinery manufacturing have fully recovered and gained ground. The net result of these trends has been a decline of industry revenue at an annualized rate of 1.4% during the five years to 2013. Resurgence in demand for metal products, which began in 2010 after a devastating year in 2009, has continued into 2013. Consequently, revenue is expected to grow 3.0% in 2013 to $222.3 billion.
Steel products account for a majority of Metal Wholesaling industry revenue, and fluctuations in the price of steel determine the fortunes of many industry players. “Steel and aluminum prices have been highly volatile over the past five years, with year-on-year price changes averaging 20.9%,” says Coughlin. Industry operators are susceptible to losses during periods of steep price drops, when the value of their massive inventories contracts. For example, when the price of steel dropped 25.1% in 2009, industry profit is estimated to have fallen, as companies often sold products at a loss in order to generate cash flow. Purchase cost increases, however, tend not to be as damaging to industry operators because they can pass most of these growing rates onto customers.
Many larger companies have expanded their market share by acquiring smaller wholesalers, and IBISWorld expects this trend to continue as competition increases. During the five years to 2013, the number of enterprises has fallen at an annualized rate of 2.3% to 7,419 companies. Although in the same period, wages fell due to unstable market conditions, wages are expected to increase during the next five-year period.
In the five years to 2018, industry revenue is expected to increase. The industry's increasing involvement in supplying oil and gas drilling tools will help boost revenue. Additionally, the recovery of key industries such as automobile manufacturers and construction will continue, and growth in metal prices will aid profit.
For more information, visit IBISWorld’s Metal Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Metal Wholesaling industry primarily wholesale metal products and contain service centers that maintain inventory and perform functions such as sawing, shearing, bending, leveling, cleaning and edging. Services provided by the Metal Wholesaling industry also include cutting-to-length, slitting, shearing, roll forming, shape correction, surface improvement, blanking, tempering, plate burning and stamping.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.