Monday, 15 Mar 2010
Reliance Steel & Aluminum Co said that its metal service centers and others in the industry and their manufacturer customers are no longer destocking inventory, but neither are they restocking, as orders for processed metal have increased in only some areas.

Mr David Hannah CEO of Reliance Steel said that "We're buying metal at about the same rate we're shipping it. Buying that is going on now by our customers in all the different industries we service and our buying from the steel mills, is not to restock the shelves."

He added that "Still, relative to demand levels. I think inventories are where they need to be. They are not too lean."

From mill to service center to end users like metal fabricators and manufacturers of everything from electronics to farm equipment, all are operating with lean inventories.

Mr Hannah also said that he expects Reliance to easily show a profit this year. He is looking for possible takeover targets, though he does not expect to find any that are suitable until the second half of 2010 or into next year. He added that "We'll certainly be profitable; we're not concerned about that. What we'd like to have is more demand so we could ship more metal."

He said that because no one wants to carry extra inventory, about half of Reliance's orders are put in by customers looking for next day delivery. And US steel mills are operating at only 70% of capacity. He added that "We're very busy in our processing facilities. The amount of tonnes we're processing is up substantially from a year ago. There is a concern that it might cause some excess on the supply side, mainly in carbon flat roll."

He said that "We're well positioned. We think we know how to do acquisitions; we've done 45 of them since our IPO. Right now, there aren't any deals out there in our industry except distressed companies. I think we should see more opportunities develop in the second half of this year and even more next year."

(Sourced from www.reuters.com)