Steel Technologies Stuck in the Middle

This article is written from the perspective of a stock investor but still contains some insight into current problems in the steel service center sector.

The Motley Fool via Yahoo! News
These aren’t the best of times to be a middleman in the steel sector. Though Steel Technologies is one of the largest North American processors of flat-rolled steel, it finds itself in a tough spot. On one hand, steel suppliers like U.S. Steel and Nucor are enjoying a pretty solid pricing environment. On the other, Steel Technologies is seeing some lag in passing those prices on to customers.
As you might imagine, that’s a tough environment in which to prosper, and Steel Technologies isn’t exactly prospering. Revenue was down 13% this quarter, and gross margins were cut in half. Given that the company wasn’t able to cut operating expenses in tune with the gross profit drop, operating income dropped considerably.

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