CHICAGO Steel plate distributor Leeco Steel LLC has announced its second expansion in two weeks, driven by customer demand for shorter supply routes to save on freight and related costs.
The Lisle, Ill.-based service center chain has purchased a 98,000-square-foot facility in Tampa, Fla., which it plans to start up in March. The companys branch in Houston is scheduled to open this month (amm.com, Jan. 22).
The Tampa service center "will expand our coverage in the Gulf region," president and chief executive officer Denton Nordhues told AMM. It will stock carbon, high-strength low-alloy, heat-treated and alloy plate steel up to 10 feet wide and 40 feet long for such industries as energy, ship and marine, transportation and general fabricators, of which "there are hundreds in the Gulf," he said.
Nordhues said that steel plate market demand "is slightly better than OK right now; not fantastic, not horrible. We are looking at 2014 as a building year. We think plate consumption will be very good over the next three to five years. Our bullishness about the future is getting us to plan ahead and get closer to customers."
He described the balance between U.S. plate supply and demand as stable, with the market share of imports fluctuating between 10 and 15 percent. "Tons come in every month due to (the need for) special grades or qualities, but imports are also a function of foreign exchange rates. A rising dollar is more challenging for domestic mills. We prefer to buy domestic," he said.
Certain products are overabundant. "Its hard to argue that we dont have an oversupply situation for quench and tempered. Additional capacity has been brought on by U.S. mills (while) mining and military consuming markets have been depressed," Nordhues said. "The one bright sign is normalized plate, which goes into rail car applications; that has been very, very busy."
Plate pricing is on the rise and "I think they will stay strong in the first half," he said. "There could be some import pressure in the second quarter, but it wont be major and we could see fairly stable but elevated market pricing."
As for Leecos rapid growth, Nordhues said that "freight is becoming a more significant part of transaction costs and we are responding to customers who want us to be closer to them. We want to be the first company they think of."