A simple way to future-proof your metal sourcing

Burlington, ON,

If you’re a manufacturer whose business revolves around the purchase and use of specialty metals, you’re likely well aware of how challenging it is to consistently source these materials. Anything from a global pandemic, like COVID-19, to the rewriting of a trade agreement, like NAFTA, can cause your go-to sources to dry up—and make it incredibly difficult to find a consistent supply of metal at a competitive price.

Fortunately, there is a way to safeguard your metal requirements from unpredictable supply issues. The secret: To find a reliable primary processor of raw materials—also known as a service center. That said, not all service centers are created equal. When searching for your next metal sourcing partner, there are a few things you should pay attention to.

The power of far-reaching connections
While it’s not too difficult to find service centers offering well-priced materials, these offerings often come from a limited number of suppliers, and this lack of diversification can cause headaches down the road.

If these suppliers are contained within a single geographical region, a localized event could swiftly disrupt them. We’re seeing this happening with COVID-19, as factory closures and roadblocks across China interfere with shipping and interrupt supply chains[1].Similarly, when the new USMCA trade agreement was being negotiated and steel tariffs were applied, primary processors with suppliers solely situated in North America were forced to pass those tariffs on to their customers.

While not every service center will have access to multiple domestic and international specialty metal sources, the good ones will—and these are the ones that can future-proof your metal supply. The more long-standing relationships a service center has across the globe, the more likely they’ll be able to continue sourcing metals at a competitive price in volatile times.

Extensive sourcing knowledge
In addition, offering global access to the world’s top mills, a good service center should also be able to provide you with up-to-date knowledge of the industry to help guide your purchasing decisions.

Ideally, you’ll want to find a service center with seasoned commodity leaders who offer demonstrable support. They should be able to discuss where the market is headed, the short-term future of material pricing and how these factors can potentially impact your business. You can then use this information to make sure you have enough well-priced, high-quality metal to see you through your next production run.

Think about the future
If you’ve already decided to simplify your buying processes by signing on with a primary processor over buying directly from a mill, make sure you interview your processors carefully. By confirming they have access to global suppliers and extensive in-house knowledge, you’ll stand a better chance of securing a consistent metal supply at the best cost and quality, regardless of what the future has in store.

[1] The New York Times, February 27, 2020. “Virus Disrupts China’s Shipping, and World Ports Feel the Impact,” by Keith Bradsher and Niraj Chokshi. https://www.nytimes.com/2020/02/27/business/economy/china-coronavirus-shipping-ports.html