Buyers searching for bargain-priced steel provide a steady market for off-prime product

Jun 01, 2010 | 05:19 AM | Scott Robertson

Discounting is a fact of life. A damaged product will almost always be cheaper than an undamaged one. But don't expect a sliding scale based on the level of damage, because market conditions play the most significant role in determining the eventual price.

We see it all the time in appliances, with "scratch-and-dent" sales by stores looking to move damaged merchandise. Washers and dryers, refrigerators and air conditioners often suffer a minor scratch or dent between the manufacturing plant and the showroom floor. Shoppers who are content to hide such an imperfection, sometimes as easily as covering it with a refrigerator magnet, or who can live with the blemish can find themselves receiving significant financial benefit as the damaged goods are priced lower strictly as a means of getting them off the showroom floor.

It's much the same with the market for secondary steel. Steel coils can be—and are—damaged in any number of ways, but that doesn't mean those coils immediately are turned into scrap. Far from it. Most find a home, usually in an unexposed application where the fact that they contain pits, skid marks, scratches, slashes or dents means nothing.....