EUROMETAL 75th Anniversary: The evolving role of steel distribution
This article is part of a series on steel distribution association EUROMETAL’s 75th Anniversary conference 2-3 July, discussing challenges and opportunities for the sector from its policy background; trade protection; the Carbon Border Adjustment Mechanism; green steel; and the evolving role of European steel distribution.
An oft-neglected aspect of the industrial transition is the growing proximity between steel producers and end-consumers, and in some cases, a perceived isolation of the supply chain’s distributors.
Domenico Martino, Chief Operating Officer of Knauf Interfer, stated in his presentation that direct mill-to-consumer long-term supply contracts for green steel would “redefine distribution’s role,” describing distributors as somewhat hamstrung in their adaptability by the inability of financial institutions to “price-in the opportunities within our reach” when issuing business or credit ratings.
Flexibility is paramount as the steel industry undergoes a period of drastic change and volatility. Attendees at the EUROMETAL Anniversary described a reduced frequency in long-term contract periods; tightening from annual, half-yearly, or quarterly supply agreements to monthly, or purely hand-to-mouth spot market sales.
As described by Ulrich Becker from Becker Consult + Beteiligungs, sales dynamics for European distributors are becoming more volatile – the biggest factor harming distribution profitability. “Lot sizes are decreasing, but frequencies are increasing,” he said.
Becker advised that distributors should attempt to evolve by establishing unique positions in the supply-chain: “business models should be sharpened going forward.” Becker encouraged distributors to ask themselves “what is the value of the company in the wider market?”
A distributor’s size could then be either an advantage, or a disadvantage depending on the specifics of their value offerings across their product and processing lines. “Specialisation will become increasingly important,” Becker concluded.
Indeed, a major theme as the conference neared its conclusion was how distribution could best cope with the evolutions in the steel sector. Ex-President of EUROMETAL, Fernando Espada, lamented growing difficulties in getting customers to pay for distribution’s value-added services, especially given the abundance of market intelligence available to end-consumers and the encroachment of steelmakers into direct-to-consumer sales.
Becker, as well as other conference attendees, instead saw this transparency as an opportunity, giving an example from his consultations with steel end-users. Becker described one project with a large consumer that wanted to better understand how prices asked by distribution mapped to steelmaker and distributor margins – this was not framed as a threat to distributor profitability, but as an opportunity, with the consumer “more than happy” to pay for the distributor’s value-adds when communicated and explained transparently.
As such, Becker, supported by others such as DM Stahl’s Fix, recommended distribution move away from “the sourcing of steel” as its primary business model, focussing more on the specialised processing of material and embracing indexation to evidence the necessity of premiums for their value-added services.
Such an approach would seem to map well to wider economic and geopolitical trends, with demand set to grow in the sustainability, infrastructural, and defense sectors – compounded by increasing protectionism and regionality in worldwide markets and supply chains. While economists at the event – such as World Steel’s Director General, Edwin Besson – emphasised that the steel markets “are, and will remain, very open,” they did expect growing protectionism and regionality in the short-term through mechanisms like melt-and-pour clauses:
“Steel is becoming increasingly attractive around the world,” he said, “it’s moved on from being the child no one wants to talk about.”
As steel’s presence in the spotlight increases, distributors will continue to face a number of challenges, but as identified at EUROMETAL’s 75th anniversary, flexibility and agility could also afford them profitable opportunities.
Benjamin Steven Journalist, Steel
EUROMETAL: European steel distribution concerned about growing mills downstream intergration
European distributors and service centers operating in the flat steel segment are facing increasing pressure as integrated steelmakers expand their direct involvement in distribution, challenging the traditional supply chain and eroding the space for independent players. This was a central theme during a recent industry panel discussion held at the EUROMETAL 75th Anniversary Conference, attended by Metal Expert.
Participants expressed concern over the growing number of mills bypassing distribution partners and reaching out directly to end users, especially during periods of weak demand. “Mills supply half a truck of one product and half a truck of another directly to customers—something that was once the stockholder’s role,” commented Fernando Espada, managing director of Tata’s Layde Steel. This behavior, according to distributors, intensifies market volatility and undermines inventory management and profitability for independent players.
The discussion highlighted a broader systemic issue: a lack of stable rules of engagement between mills and service centers. “Distributors are being squeezed not between producers and users, but by the mills’ pricing practices and volume dumping at financial period ends,” noted Marcus Fix, managing director of DM-Stahl, adding that such practices severely impact margin visibility and long-term planning.
Panelists also compared the European and US distribution models. In the US, distribution and steelmaking are largely separated, with an estimated 85–90% of service centers independently owned. By contrast, in Europe around 30% of stockholding distribution—and slightly more than 50% of service center activity—is controlled by mills. Despite differences in structure, US players showed stronger financials, with EBITDA margins averaging 6.2% over 2016–2023, compared to 3.6% in the western Europe.
While there was no unified consensus on which model is preferable, many agreed that the European model leaves independent distributors more vulnerable, especially when mills aggressively pursue downstream sales. To address this, several speakers advocated for a shift in business strategy.
“The business model of distribution should be sharpened going forward and have a high specialization,” said Ulrich Becker, senior managing partner at Becker Consult + Beteiligungs.
According to conference participants, wide specialization exposes distributors to higher stock risks and price devaluation. Narrower specialization allows better alignment with end-user needs and improves the ability to charge for value-added services.
Another recurring point was the need to redefine pricing models to better reflect the true cost of services. Distributors called for more transparent pricing that separates material costs from services like cutting, logistics, and stockholding.
“What we see is that the successful companies are those who are able to show to the customer that they are providing the additional services and that has a cost. And customers have to pay for it,” Fernando Espada added.
The panel concluded that future success for European distributors lies in building value-driven, service-focused business models, rather than relying on scale or commodity flows. As market pressures intensify, those who can clearly articulate and monetize their role in the supply chain will be better positioned to survive.
Vlad Shementov
