Steel distribution in Spain and Portugal is undergoing a significant transformation, Kallanish heard from speakers at last week’s EUROMETAL Steel Net Forum Iberia in Vilamoura, Portugal.
While the 2025 outlook is positive, thanks to increasing orders, the industry continues to struggle with low profit margins and the growing challenge of steel producers acting as direct suppliers to customers.
“The distribution sector is evolving through automation, digitalisation, and optimised stock management, but margins remain unsatisfactory,” said José Velasco, president of the Cosimet Group. The high level of competition in the Iberian Peninsula, compared to France or Germany, is a major factor behind this trend.
According to Velasco, the industry is facing an increasingly aggressive challenge from steel producers engaging in direct sales. He highlighted the shift in supply chain dynamics, especially in rebar and pipes.
“Producers have their role and should not be involved in direct distribution to the end customers. In the supply of rebar and pipes, this intervention is quite noticeable. We are moving to the other side of the steel chain. In Spain, mills are now selling directly to small customers, often at similar prices to distributors. But we manage warehouses, and transform the material, creating value that is practically not reflected in the final pricing. We have minimal margins,” he observed.
This trend of disintermediation is a shift that Spain and Portugal may feel more intensely than other European countries. “Mills shouldn’t ignore us. I’ll give you an example of the automotive sector, where buyers must go through dealers rather than purchasing directly from manufacturers,” Velasco continued.
Distributors offer personalised service, stock availability and credit lines, executives argued, adding that the sector’s future must be based on generating value, with mills distinguishing between end customers and distributors.
“Steel producers want large, simple orders and our goal is to receive small, complex orders, which factories can’t handle, and pass them on to our customers,” explained Roberto Gonzalez, chief executive of Tirso CSA steel distribution company and president of the Spanish steel stockists association, Unión de Almacenistas de Hierros de España (UAEH).
“Many customers now buy directly from mills under the same conditions as distributors. This undercuts our sector, creating downward pressure on prices and harming the entire supply chain. I don’t think it’s right for manufacturers to undercut our customers. I think it’s backward; I dare say, a lack of vision,” he noted.
Carolina Vieira, an executive at Portuguese company J. Justino das Neves, likened the situation to a ship in danger of sinking unless all players row in the same direction.
“Right now, distributors are keeping the ship afloat, but if steel mills don’t support us, we’ll all go under. Producers must recognise our role in adding value, or we’ll all sink together,” she warned. “I take care of myself, and god takes care of others – this isn’t working. We can’t be a chain, a sector, like this.”
Similarly, Juan Carlos Núñez, ceo of Hierros y Aceros García y Compañía, emphasised the rising costs and need for better market organisation.
“The market is becoming increasingly demanding, with higher costs, a growing population, and in an environment of enormous uncertainty and volatility in geopolitical terms. So who wouldn’t want to sell at higher prices? To assume that cutting, drawing, and transport fees won’t be reflected in costs is utopian. We need to clarify where we add value and why it matters,” Núñez explained.
Steel Net Forum Iberia participants stressed that a well-organised market benefits all stakeholders and that the distribution sector is there to offer more solutions to customers. Many suggested replicating the North American competition model, where mills focus on production, not direct distribution, while sellers maintain their role as intermediaries, providing added value and services.
Alternatively, some industry voices urged for price differentiation policies, pushing mills to offer greater discounts to distributors who assume commercial risks and provide extensive value-added services.
