Final Thoughts

Businesses are hoping the labor pool will swell now that enhanced federal unemployment benefits have lapsed. Resumption of in-person classes at schools will also have an effect as parents – freed from supervising their children’s remote learning – can reenter the workforce.

“Many of these factors are coming to fruition around the same time, suggesting there may be some easing of labor-force pressures late this year,” said the experts at ITR. “However, due to the severity of the labor market imbalance, we expect only moderate relief in the near term. The labor market imbalance existed before the COVID-19 pandemic and will not be resolved by a reversal in pandemic-related trends.”

Disintermediation Rearing Its Head Again?

Prior to joining Steel Market Update, I spent 20 years editing Metal Center News, a publication dedicated to the metals distribution channel. There I became very familiar with the word “disintermediation,” a fancy term for “cutting out the middleman.” That is among service center executives’ worst fears.

Steel mills have tried many times in the past to sell directly to large OEMs – sometimes through e-commerce schemes – usually to find they can’t provide the level of service that these customers have come to expect. In the process, they have damaged their relationships with distributors, who basically are an extension of their own salesforce.

SMU received a note recently from one service center exec who reported that some of his large customers are starting to get offers directly from a couple of mills.

“Considering the supposed supply constraints, I find it interesting they are going around the distribution base, which is a big percentage of the mill book, and trying to sell directly. Now that we are down to just four large producers and a few smaller regional mills, are they trying to shift strategies to try to cut out the middleman?” he asked.

Given the degree of mill consolidation, is this perhaps a strategy whose time has come? Or is it just a couple mills sending up a few trial balloons? Have you heard similar reports from your customers? Send a note (not for attribution) to Tim@SteelMarketUpdate.com and let me know what you think.

You have just a bit more than two weeks to take advantage of the information on the SMU Steel Summit conference platform. Attendees will have access to the platform at www.smusteelsummit2021.com until 5 p.m. EST on Friday, Oct. 1.

SMU Events

There’s still time to register for SMU’s next Steel 101: Introduction to Steel Making & Market Fundamentals Workshop, which is set for Oct. 5-6. The curriculum is designed as a primer for those new to the industry and even as a refresher for those with some experience. Participants will get a look at all the stages of production in a virtual guided tour of a steel mill. You can learn more about next month’s Steel 101 workshop by clicking here.

Also put this on your calendar. SMU will co-host the Tampa Steel Conference, along with Port Tampa Bay, on Feb. 14-16, 2022, at Tampa’s Marriott Water Street Hotel. This will be a live and in-person event. You can learn more by clicking here. 

As always, we appreciate your business.

Tim Triplett, SMU Executive Editor, Tim@SteelMarketUpdate.com