Jan. 4, 2017

High-Strength Secondary a Prime Opportunity

Introduction of a new product invariably creates two new markets—one for the innovation itself and a secondary market for orphaned (used or off-spec) items in search of a new home. True to this tenet, development of advanced high-strength steels for the automotive sector has created a new opportunity for service centers.

What happens to a “prime” coil when it is delivered by the mill but is rejected by the customer? Service centers pick them up at a discount and try to find other buyers whose spec is not as demanding. Perhaps the gauge was off a fraction or the sheet was not flat enough for its original automotive application. To the maker of lawnmower parts or industrial shelving, the steel may be more than adequate. Secondary products might also include coils that sat in the warehouse too long and began to rust or pipe and tube that was cut to the wrong length. Nothing wrong with them, given the right remediation and the right application.

Advanced high-strength steel is generally considered a mill-direct sale to the auto industry, but high-strength coils are beginning to show up on the secondary market, says Jim Barnett, president of Grand Steel Products, Wixom, Mich. Coils that don’t pass muster with their original buyer need to be utilized in some fashion, even if for an application that would not necessarily require such high-tensile materials. “Steel producers are looking to the service center industry to help get that product consumed in some way, shape or form other than the way it was originally intended. That’s our job, that’s what we do,” he says.

Evolution of a secondary market for high-strength steels is inevitable, says Brian Robbins, CEO of MidWest Materials, Perry, Ohio. Some coils undoubtedly will be rejected by auto parts suppliers and find their way into the market at large. But because it takes special equipment and expertise to process high-strength materials, not every service center can sell them, and not every fabricator or OEM can use them. “Secondary AHSS products are likely to go for a greater discount than commodity items as they are less utilitarian and therefore have a smaller market,” he predicts. “But for those who are adept at handling, processing and marketing these items, it presents an added opportunity.”


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Wednesday, October 18, 2017