Service Centers

Reliance: Insulated From Steel Price Swings, Targeting M&A

Written by David Schollaert

July 28, 2022

Though steel prices might down from the historic highs of 2021, Reliance Steel and Aluminum sees its diverse product portfolio and end markets as a buffer, executives said during an earnings call with analysts on Thursday, July 28.

“Our product breadth is so diverse, which is part of the strategy and design,” company president Karla Lewis said. “We have limited exposure to carbon flat rolled, specifically hot-rolled coil, which is where you saw the most price destruction during the quarter.”

Reliance

“A lot of the other carbon steel products maintained their pricing levels,” she added. “There were some downward revisions in scrap, but not a lot of carbon products followed that.”

Reliance thinks the declines in other carbon products was partly because of healthy demand. And although prices for carbon steel plate declined, the company believes tags will remain well-above historical standards.

“We do see pricing levels remaining good though we do anticipate them to soften a bit next quarter,” Lewis said. “But we think a lot of the price correction has already happened for most products that we carry.”

Repeated record-settings quarterly profits continue to position the company toward its growth targets, including more opportunities to expand via merger and acquisitions.

“We continue to do what we have always done,” CEO James Hoffman said when asked about the potential of future acquisitions.

Though 2022 has been a relatively quiet year for Reliance on the merger and acquisitions front, 2021 saw the company acquire four metal distributors and service centers.

“There’s a target-rich environment out there. Really fine companies, and we’ll continue to look at those,” Hoffman said.

“Our approach hasn’t changed,” he added. “We buy good companies, and there are plenty of them.”

Headquartered in Los Angeles, Reliance is the largest metals service center company in North America with a network of approximately 300 locations in 40 states and 13 countries outside of the US.

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is deputy editor-in-chief for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. He can be contacted at david@steelmarketupdate.com or 724-720-1008.

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