Metal Wholesaling in the US Industry Market Research Report from IBISWorld has Been Updated
Los Angeles, California (PRWEB) July 12, 2013 -- The Metal Wholesaling industry remains one of the largest industries in the United States, even though it was dealt a significant blow during the recession. Metal wholesalers and service centers supply metal products to almost every manufacturing and construction industry. “The economic downturn hit these downstream buyers hard, and they remain in various states of recovery,” says IBISWorld industry analyst Hayden Shipp. 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 1.1% 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. Revenue is expected to grow 6.2% in 2013 to $220.5 billion.
Steel products account for a majority of revenue for the Metal Wholesaling industry, and fluctuations in steel's price determine the fortunes of many industry players. Steel prices have been highly volatile during the past five years, with year-on-year price changes averaging 20.9%. “Industry operators are very susceptible to losses during periods of steep price drops, when the value of their massive inventories contracts,” says Shipp. For example, when the price of steel dropped 25.1% in 2009, industry profit is estimated to have fallen 73.9% because firms often sold products at a loss in order to generate cash flow. Purchase cost increases, however, tend not to be as damaging to industry firms because they can pass most of these rising costs onto customers. As such, the annualized drop of 1.3% in the price of steel during the past five years has caused profit to fall during the period.
The main reason for the industry’s low level of market concentration is the need for businesses to be close to customer markets. For most metal wholesaling establishments, the majority of customers are located within a 200-mile radius. As a result, the metals distribution business remains highly fragmented, with the vast majority of service centers offering value-added processing and rapid delivery to customers in a wide range of markets.
Consolidation has been high in the past five years, with the level of concentration within the industry rising. Larger companies such as Reliance, Ryerson, Kloeckner, O'Neal and Olympic have made major acquisitions in the past five years. Consolidation has also occurred among smaller players, as local operators merged in an effort to withstand turbulent economic conditions.
While many larger companies have expanded market share by acquiring smaller firms, startups continue to enter the market to capitalize on recent growth. During the five years to 2013, the number of enterprises has risen at an annualized rate of 1.3% to 7,263 firms. Expansion in the number of firms is forecast to continue through 2018 as demand from construction and manufacturing continues to rise. 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, while 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 this industry primarily engage in the wholesaling of metal products. The industry also includes 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.
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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.
Gavin Smith, IBISWorld Inc., http://www.ibisworld.com, 310-866-5042, [email protected]
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