Service centers fear customers will move operations offshore

Service center executives in the US fear that rising prices on domestic steel, in addition to tariffs and restrictions on imports, will disrupt the manufacturing environment, causing service center customers to shift their operations offshore. Pricing and supply problems arising from overcapacity are expected to remain unless mills consolidate. Price increases could benefit distributors that already have lower-priced metal in stock, but most do not hedge on prices and instead strive to balance inventories with perceived demand. Distributors hit hardest by higher prices are those without long-term contracts.