Kloeckner Metals Corp.s exit from the West Coast
structural steel market is being applauded by other
distributors still pulling out of a post-2008 market slump.
"Maybe this will bring
a semblance of order to this market," said a western
distributor who, like many of his counterparts, believes
theres been too much service center capacity in the
regions wide-flange beam market, where nonresidential
construction activity remains far below its 2006-07 heyday.
Kloeckner, based in
Roswell, Ga., has pulled out of the West Coast market for beams
and structural tubing, and after filling pre-existing orders it
will close its Fontana and Stockton, Calif., facilities by late
amm.com, July 9). It has agreed to sell the
assets, including inventory, to Aurora, Colo.-based
Brown-Strauss Steel, market sources said.
arent rejoicing over the possibility that people may lose
their jobsKloeckners plans for employees at the two
facilities arent knowntheyre not unhappy that
supply could ultimately tighten.
"We love the idea" of
one less major competitor, a West Coast service center
exit, Brown-Strauss Steel is seen as even more entrenched in
its generally acknowledged role as the largest western beam and
tubing distributor. Reliance Steel & Aluminum Co., which in
the past has claimed to be the nations largest beam
buyer, would appear to be a clear No. 2 in the West. Among
Reliances West Coast outlets that stock beams are
Stockton-based PDM Steel Service Centers Inc.; CCC Steel Inc.,
Rancho Dominguez, Calif.; Crest Steel Corp., Cypress, Calif.;
and Portland, Ore.-based Lampros Steel Inc.
Brown-Strauss western market share vary greatly,
depending on the region, although they usually start at 30
percent and range upwards. Kloeckners share has been
estimated at 20 to 25 percent.
Many observers saw the
Kloeckner operations, with their traditional access to imports,
as Brown-Strauss most direct and aggressive rival in the
West. They were part of Macsteel Service Centers USA prior to
Macsteels 2011 acquisition by Duisberg, Germany-based
Klöckner & Co. SE. More recently, however, the
Kloeckner facilities were seen as somewhat less dependent on
The largest regional
market in the West includes California, southern Utah and
Arizona, where structural demand was estimated at 15,000 to
18,000 tons per month before the 2008 recession and some 5,000
to 6,000 tons per month less after the downturn. The remainder,
including the Pacific Northwest and Intermountain West,
accounted for an estimated 12,000 tons per month prior to the
slump, but could be off by a lesser portion, buoyed by the
Mountain States comparatively stronger energy-related
economy, according to observers.
Brown-Strauss and the various Reliance operations, the number
of independent beam outlets is limited. Two of the most
significant are distributors Johannessen Trading Co., Los
Angeles, and Seaport Steel, Seattle.
In addition, Triple-S
Steel Holdings Inc., Houston, a major privately held chain,
operates Denver-based R&S Steel, which also has a Salt Lake
City, Utah, facility. Triple-S has a reputation for ferreting
out niche market opportunities, and R&S Steels
management includes veterans of the western structural market,
leading some observers to wonder if it might not seek to fill
part of the void created by Kloeckners exit. A Triple-S
executive couldnt be reached for comment.
While most major
domestic mills ship some beams directly to fabricators, there
are no wide-flange beam mills west of the Rockies, and the
preponderance of tonnage sold in the West goes through service