Analysis
May 7, 2026
Russel Metals sees strong second-quarter setup
Written by Laura Miller
Russel Metals saw tightening supply and rising steel prices in the first quarter. The service center and distributor’s larger US footprint is now delivering more than half of the company’s operating profit, according to executives speaking on a first-quarter earnings conference call on Wednesday.
CFO Martin Jurasek described the first quarter as a “positive inflection point” as strategic initiatives, including the recent Kloeckner acquisition, began to materially lift results.
Supply tightens
Executives reported strengthening steel supply conditions in the first quarter. Jurasek said US mills were operating at “very healthy” levels near 80%. And with extended lead times and lean inventories across the sector, the company expects scheduled Q2 mill outages to further tighten supply.
Russel executives said the tone in the market improved steadily from January through March and has continued into April. Demand is “solid” across most regions, according to President and CEO John Reid, with the US showing the strongest momentum.
Prices rise
Hot-rolled coil and plate prices increased throughout Q1 and are currently running above the quarter’s average, they said on the call. Russel expects additional mill price increases in Q2, supported by tight supply and firm demand.
Service center margins improved sequentially. Management expects further margin expansion in Q2, helped by rising prices and early integration work at the seven former Kloeckner locations.
Record shipments
Russel’s service center shipments hit an all-time high in Q1. Volumes were up 32% sequentially. The acquired Kloeckner branches contributed roughly 17% of total tons shipped.
Same-store shipments increased 9% from Q4’25 despite severe weather disruptions in late January. Jurasek said the strong finish to Q1 provides a solid base for Q2, where volumes are expected to be flat to slightly higher.
Kloeckner integration
The executives on the call outlined a multi-year plan to lift margins at the seven acquired Klockner service centers in the US.
Phase one is currently underway, with pricing discipline, procurement changes, and alignment with Russel’s commercial approach.
Phase two in late 2026/early 2027 will see the full integration of Russel’s regional operating structure and systems.
Phase three, late in 2027, will invest in value-added equipment to bring the branches closer to Russel’s traditional service center model.
The Kloeckner assets generated CA$8 million in Q1 EBITDA, in line with expectations, Russel said.
Capex set to rise
Capital spending totaled CA$18 million in Q1 but is expected to accelerate in the second half of 2026 and into 2027.
Jurasek said a wave of discretionary projects – including value-added upgrades at Kloeckner sites – has recently been approved across both US and Canadian operations.
US platform outperforming Canada
For the first time, Russel’s US operations generated more revenue than its Canadian units, representing 53% of total sales and 58% of operating profit in Q1.
The executives attributed the shift to stronger US market conditions, higher profitability in US service centers, the addition of Kloeckner branches, and ongoing industrial manufacturing growth in the US.
Canada remains stable, with improving indicators, according to the executives. But Reid noted US growth opportunities are significantly larger, particularly in the South, the Midwest, and the East Coast.
