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Specialty metals distributor says cheap gas fuels growth

Keywords: Tags  CHRG Metals, Tate Forrester, O'Neal Steel, steel plate, natural gas, Big River Steel, Corinna Petry

CHICAGO — CHRG Metals is hitting the right materials-consuming markets at the right time and has experienced exponential growth as a result, the company’s general manager told AMM.

CHRG had sales in excess of $10 million last year, and the company hopes for "a 20- to 25-percent increase in sales in 2013," general manager Tate Forrester said. "We are tripping over metal as we speak."

Houston-based CHRG—which stands for "corrosion- and heat-resistant grades"—is a business unit of O’Neal Steel Inc., a privately held $2.5-billion service center chain and processor based in Birmingham, Ala.

"We are the group within the entire family that focuses on grades of specialty and nickel. We are the specialty plate house," Forrester said. CHRG takes material up to 96 inches wide and burns it to size for customers.

The materials have to stand up to salt, harsh chemicals and high pressure. "Our customers are in power generation, oil and gas—midstream and downstream—and chemical processing," he said. "We’ve also seen a nice success with tank car builders." CHRG typically sells to Tier I and II fabricators in those industries.

About half of CHRG’s business is project-specific and half consists of spot sales. "We pride ourselves on being able to handle the complex project work with longer lead times as well as having inventory on the floor for quick jobs," Forrester said. A power plant, for example, may have to shut down suddenly and would need material of a certain thickness cut a certain shape. Due to a power plant’s high fixed costs, it shouldn’t be down long and would require "very quick lead times" from CHRG, Forrester said.

Several factors have boosted sales, he said. In contrast to the recession period, when railroads weren’t repairing or replacing tank cars and rail cars, railroads are now trying to fill backlogs and have brand-new demand from the Bakken and Marcellus shale plays, Forrester said.

In addition, as demand grows for cheaper domestic fuel to run large factories and power plants, "the ConocoPhillipses, Shells, Valeros and ExxonMobils have to get that moved to market and refined," Forrester said.

CHRG has witnessed "quite a strong amount of activity throughout the Gulf Coast," he said. "Dow Chemical and Conoco announced multiple billions of dollars of expansion plans because natural gas is a cheap feedstock for chemical processing."

The proposed Big River Steel LLC project (, Jan. 29) should be fueled by natural gas, and other foreign mills have hinted that they want to build greenfield mills throughout the Southeast in the next three to five years because "natural gas feedstock is such an attractive proposition," Forrester said. That, too, "would be a good fit for our business, because a lot of our products go into furnaces."

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