Market for steel service companies

BE Group and other steel distributors play an important role in the value chain. They bridge the gap that exists between steel producers’ delivery capacity and steel consumers’ needs. The individual steel producers provide a limited selection of products, often in bulk and with relatively long lead times. However, many steel consumers seek a single coordinated supply of several different products in smaller quantities with short delivery times. Purchasing is then normally conducted via a steel service company, where BE Group is one of the leading producer-independent suppliers.

The road to market – from producer to customer

The chain from production of the steel to its final use by the purchaser of the steel can mainly take place in two ways, either the tonnage is supplied directly from the steel mills to the customers or delivered through distributors and steel service centers, i.e. BE Group’s market.

The steel mills most often sell directly to customers that consume large volumes of steel in, for example, the shipbuilding and automotive sectors. Direct deliveries are more common in the flat products segment, where volumes are often large and the need for further processing before delivery is lower.

Purchases through distributors and steel service centers meet an important need among customers by being able to offer single coordinated supply of several different products in smaller quantities with short delivery times. The materials are more often delivered in a further refined condition.

From producer to customer

The chain from the production of the steel to its final use by the purchaser can, put simply, take two different forms.

Competitors

BE Group is one of the market´s leading actors in both Sweden and Finland. A significant competitor in these markets is Tibnor. Other competitors are for example Stena Stål in Sweden and Kontino and Flinkenberg in Finland.

Amounts in SEK M
Company Sales Change 2016/2017 Operating profit Operating margin
BE Group 4,348 +12% 57 1.3%
Tibnor 7,821 +14% 252 3.2%
Stena Stål 1) 2,189 +35% 93 4.2%

1) Information refers to the financial year September 2016 to August 2017.

Steel market

In its “Economic and Steel Market Outlook 2018-2019” from 1 February 2018, Eurofer assesses that the outlook for steel consumption within EU is still positive and that the demand for finished steel products will increase by 1.9 percent from 160 million tonnes in 2017 to 163 million tonnes in 2018.

According to Eurometal’s “Economic & Steel Market Outlook 2018-2019” from February 2018, 2017 was a strong year for the steel industry in EU and the outlook for 2018 is positive even though the activity in the steel industry will settle back into a more restrained pace mainly due to the decrease in the tube sector and automotive industry.

Growth forecast per end user in steel for EU 2012 2013 2014 2015 2016 E 2017 F 2018
Construction -5.1% -2.9% +1.7% +1.6% +0.4% +4.3% +2.6%
Mechanical engineering -0.5% -3.8% +1.5% +0.1% +0.7% +4.9% +3.1%
Automotive -4.6% +1.0% +4.9% +7.5% +5.2% +3.7% +1.7%
Domestic appliances -1.3% +0.2% -0.3% +4.3% +1.5% +3.7% +2.7%
Metal ware & goods -2.7% -0.3% +2.5% +2.2% +2.4% +5.0% +2.9%