Friday, October 07, 2005

Ebay for the Steel industry?

I came across this article today at The Stalwart
The website dubbed itself “The Ebay of the Steel Industry”, and it does seem justified. The company allows buyers and sellers to conduct auctions on spare steel which may be lying around in warehouses all over North America. How does spare steel arise? From a recent article, here’s an example:
On a specific lot of steel, here’s how it worked in one recent case. A cargo of cold-rolled coil came into the U.S. at a prime price of $34 per hundred weight. The original trading company was not willing to accept the metal in its condition because he felt it was not prime, but he was considering what is known as a retention offer at $18 per hundred weight. On behalf of the insurance company and the trading company, SteelSalvor posted the material on the web site, conducted an auction and got 172 bids, and sold the same steel – in its damaged condition – for about $33.50, reducing a $250,000 claim in favor of an $8,700 claim. This was a win-win for everybody involved, and the trading company avoided a boost in insurance premiums to boot. It’s a good example on the marine insurance side.
Over the past few years I have followed the fortunes of a number of e-metal sites with interest. Whilst steel is generally considered to be a commodity, the wide variety of grades and sizes demanded by the end users, largely excludes them from this marketplace. The principal of online steel auctions as demonstrated by the example above have nevertheless a role to play in the industry. Direct selling by the producers and service centres, to end users will have little to fear from such ventures. They could however have a major impact in the “steel trader” marketplace.

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