Market for steel service companies

BE Group and other steel distributors play an important role in the value chain. They bridge the gap between steel producers’ delivery capacity and steel consumers’ needs. The individual steel producers provide a limited selection of products, often in large quantities 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.

Steel market OUTLOOK

In its “Economic and Steel Market Outlook 2020-2021 – Quarter 1, 2020” from January 30, 2020, Eurofer states that the current downturn of the manufacturing sector in the EU is not likely to bottom out in the very short-term. Major risk factors are escalating trade wars between the US and several of its main trading partners (mostly China, despite the trade agreement signed on 15 January 2020 that has eased frictions) and persistent uncertainty regarding the final Brexit deal to be agreed by the end of 2020. These factors are set to weigh on trade conditions during 2020, and may even lead to a further deterioration in business sentiment and seriously hamper investment growth.

Market conditions are expected to improve slightly from the third quarter of 2020, although risks related to import distortions and continued global overcapacity are likely to continue undermining the stability of the EU steel market.

The outlook from Eurofer was published before the outbreak of Covid-19 (coronavirus) and its potential consequences has therefore not been taken into account.

EU steel weighted industrial production (SWIP) index EU28 economic indicators

Year-on-year change in % 2015 2016 2017 2018 E 2019 F 2020 F 2021
Förändring från år till år % 2015 2016 2017 2018 E 2019 F 2020 F 2021
Construction Byggindustri +1.6% +0.4% +4.3% +4.8% +3.8% +0.8% +0.8%
Mechanical engineering Verkstadsindustri +0.1% +0.7% +4.9% +3.7% -0.3% +0.6% +1.5%
Automotive Fordonsindustri +7.5% +5.2% +3.7% +0.6% -5.9% +1.0% +2.8%
Domestic appliances Vitvaruindustri +4.3% +1.5% +3.7% -0.8% -1.4% -0.1% +1.3%
Metal goods Övriga metallvaror +2.2% +2.4% +5.0% +1.8% -1.3% -0.1% +1.5%
Source: Eurofer “Economic and Steel Market Outlook 2020-2021 – Quarter 1 2020”

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 2018/2019 Operating profit Operating margin
Belopp i MSEK
Bolag Omsättning Förändring 2018/2019 Rörelseresultat Rörelsemarginal
BE Group BE Group 4,359 -9% 88 2.0%
Tibnor Tibnorkoncernen 9,149 8% 30 0.3%
Stena Stål 1) Stena Stål 1) 2,319 -1% 41 1.8%
1) Information refers to the financial year September 2018 to August 2019.