Today, the metal market is an extensive and actively developing sector that has retained its high positions even amidst the pandemic. What awaits the market in the near future and what changes are taking place?
Digitalization: From production to sales
The transition to digitalization has been the most apparent trend of the last five years. Today, all major metallurgical companies are going through digital transformation, which has become particularly relevant during the current pandemic. It has become obvious for market players that introduction of digital approaches to management allows not only to significantly cut production costs but also to respond proactively to the necessity for modernization and adoption of new investment decisions.
Digitalization has affected the market as regards sales, which is unsurprising as this sector of business has traditionally utilized analog approaches and has been utterly dependent on human actions. Today, the market demonstrates the need for prompt work of sales departments, which is important for keeping clients. For instance, currently all major steel companies are channeling their resources to developing e-commerce. This proves that the e-commerce channel will show an intensive growth in the near future, while market participants will see emerging innovative business models for B2B metals trading.
This will definitely require all participants in the chain to restructure their business processes due to an existing concurrent tendency for the decreasing average check, increasing number of order items, and a greater number of orders. These trends will lead to faster work of sales departments, adoption of standards for LTL deliveries, new methods of storing metals and related products at warehouses, updated payment methods, and others.
2021 has been a year of growth for the Russian metallurgy as well as for the global metallurgical sector. The impressive trend of transition to electric cars and alternative energy is leading to the use of a large amount of industrial metals for production. Experts estimate that the metal market will serve as a good channel for long-term investments within the next 5-10 years.
The future of the metal market
Metallurgy market analysts do not expect another surge in prices in 2022 similar to what has occurred this year, with the pandemic being one of the factors. As regards the ferrous metal market — which is Russia’s largest in terms of volume — analysts expect a low possibility of prices to return to their 2019 levels. In this regard, in case a stable trend occurs towards a decrease in prices, suppliers — and metal trading companies in particular — will be in dire need of selling warehouse stocks. This will result in a greater need for placing products on third-party platforms in order to promptly reach end customers and sell metal products.
At the same time, in case the market remains highly volatile, the tendency towards customers seeking suppliers through online sales channels will continue to grow significantly; this is due to a turbulent market which provides an opportunity for cost savings through seeking new suppliers and comparing their offers.
For instance, MetalScanner, which serves as an aggregator of offers as well as a single entry point for purchasing any metal product, predicts the company’s solid growth in 2022. The increase in the number of orders will continue due to the emerging e-commerce boom in B2B.
The number of partners will also expand; this applies both to metal suppliers as well as service centers, transport companies, financial institutions, and others. The obvious value of transparent models of work in transactional businesses will allow the company to expand its loyal customer base.
Market participants generally agree that 2022 will see a necessity for developing services and investing in efforts to improve business efficiency to maintain the same level of profitability.
By Roman Volkov, General Director, MetalScanner