Service Centers

Reliance Foresees Better-Than-Expected Demand Continuing
Written by Laura Miller
October 27, 2022
Somewhat better-than-expected demand helped service center behemoth Reliance Steel & Aluminum Co. achieve strong third-quarter sales.
And despite macroeconomic uncertainty, inflation, continuing supply chain disruptions, and geopolitical issues, the Scottsdale, Ariz.-based company anticipates healthy demand trends to continue in the current quarter, according to its Q3 earnings report released on Thursday, Oct. 27.
The company expects normal seasonality, however, to affect fourth-quarter shipments, with an expectation of tons sold to be down 6.5% to 8.5% from the 1.406 million tons shipped in Q3. Compared to year-ago levels, Q3 shipments were 4% higher but were down 3.4% sequentially.
For Q3, Reliance posted net income of $394 million on net sales of $4.25 billion. Net income was down just 0.6% from the same quarter last year while sales were 10% higher. Compared to the prior quarter, income was 31% lower and sales were 9% lower.
“We believe our third quarter results highlight the resilience of our unique business model in various pricing and demand environments,” commented CEO Jim Hoffman. “Specific elements of our model, including our value-added processing capabilities, buy-domestic philosophy, and focus on smaller order sizes with quick turnaround, collectively help stabilize our operating results amid challenging macroeconomic circumstances.”
Q3 carbon steel sales totaled $2.372 billion — down 9.7% from Q2 and 1.4% from Q3 2021 — with tons sold of more than 1.13 million down 3.2% sequentially but up 3% year-on-year. Carbon steel plate and carbon steel tubing each accounted for 11% of Q3 sales, followed by carbon steel structurals at 10%, hot-rolled sheet and coil at 9%, carbon steel bar at 5%, galvanized sheet and coil at 5%, and cold-rolled sheet and coil at 3%. Stainless steel was 16% of total sales and aluminum products were 15%.
Non-residential construction, which includes infrastructure, is Reliance’s largest end market. Demand from the sector was at “healthy levels and fairly consistent” with Q2, Reliance said, and expectations are for this to be maintained through year’s end.
The broader manufacturing sectors saw a slowdown in demand from Q2 to Q3, which the company expected, and a further seasonal slowdown is anticipated in the current quarter.
Demand in the oil and gas markets is expected to improve modestly in Q4, while demand in semiconductor manufacturing is expected to continue to be robust, and a continuation in a recovery in the commercial aerospace sector is expected.
Reliance is the largest metals service center company in North America, with 315 locations in 40 states and 13 countries.
By Laura Miller, Laura@SteelMarketUpdate.com

Laura Miller
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