Stay the Course: The 2019 Hangover Was Sure to Follow the 2018 Party
Editor’s Note: Every week Diamond Brite Metals, the country’s most comprehensive architectural and commercial polishing facility, will be providing hard-hitting analysis regarding every step of the metals supply chain.
2018 was an unparalleled year for the metals sector. All steps of the metals supply chain, from the mill to the service center to the architectural and commercial polishing house, saw a dramatic increase in sales. Ryerson, Reliance, and Outokumpu all reported record sales in 2018 on the back of the Trump Administration’s unveiling of Section 232, which placed substantial tariffs on imported steel and stainless steel. Washington’s mercantilist policies insulated domestic steel producers and service centers from competing in an oversaturated and diluted market. With no foreign competition, domestic steel producers and service centers avoided compressing margins to account for increased volume. Combined with federal tax cuts and a booming economy, they were able to increase prices across the board to satisfy a demand for steel and stainless steel. This confluence of factors swelled the pockets of producers and service centers. The architectural polishing market boomed as architectural fabricators went to market to avoid unstable pricing.
Times were good. But, as expected, the hangover loomed around the corner. Geopolitical forces and domestic instability ushered in a chilled market in 2019. The Infrastructure Bill promised by Washington, which seemed like an inevitably, became mired in the Russia Investigation and the jockeying for political capital in advance of the 2020 Presidential election. A short-sighted approach to the market may cause the unseasoned metals professional extreme discomfort but in reality the situation is not so dire. Traditional metrics suggest an economy that is still growing and a construction market that has not yet reached its peak. Cities across the United States continue to expand and, with their growth, the demand for steel and stainless steel certainly will follow. The remaining question is, what does 2019 have in store for management teams at the mill, the service center, or the architectural polishing facility?
In the short term, with the weather warming and construction sites beginning to awaken, undoubtedly, architects, design professionals, fabricators and other end-users will being to release projects and jobs. This increase in the early spring months is expected as part of the industry’s cyclical pattern. Subsequently, the architectural polishing market will increase as fabricators and end-users need #4 finishes or decorative #8 mirror finishes.
Looking long-term, traditional barometers signal continued growth but the growth will most likely not be as explosive as 2018. The sales curve will flatten as the market continues to regulate itself amidst a rocky geopolitical environment. However, Diamond Brite Metals forecasts that the architectural end of the market, still swollen from increased profits and building off continued construction efforts, will continue to increase at a relatively high level. This will continue to demand architectural polishing. Although 2019 will not be as good a year as 2018, companies should still see high sales and lucrative margins.
Diamond Brite Metals is the country’s most comprehensive architectural and commercial polishing facility. Diamond Brite Metals provides architectural polishing to major architectural firms, architectural fabricators, and general contractors across the United States. For an RFQ, please contact Sales@diamondbritemetals.com.