September 26th, 2022

The steel industry has many players involved throughout its supply chain. Steel has many applications in a variety of industries including the construction, domestic appliance, manufacturing, automotive and other transportation industries. These industries rely on steel mills and service centers to provide them with quality steel that meets all of their needs and specifications. Mills and service centers work together to produce and supply steel to many customers, but their primary functions differ.

Steel mills are industrial plants where the steel making process takes place. There are two different types of steel mills. Integrated steel mills produce steel from raw material using the full cycle of the steel production processes. During this process, the mill uses a blast furnace to smelt iron ore and other materials such as coking coal, limestone and other alloys. Integrated mills have become less popular due to the high cost of heating and cooling blast furnaces, as well as their lack of sustainable production processes. Mini mills are the second type of steel mill. These mills increased in their popularity due investment and steel production costs being significantly lower than integrated mills. Mini Mills use electric arc furnaces to produce steel. During the production process, iron is obtained from scrap steel which is then mixed with other alloying elements and charged material to ensure specific chemical properties. The steel mills are the biggest players in the steel production process, but they would not be able to adequately distribute their wide variety of products without the role of a steel service center. 

Steel service centers also play a crucial role throughout the entire market for steel and steel products. Their function is to procure steel in bulk from mills, manage inventory, and distribute steel products to a wide range of customers. Service centers will also often process the bulk steel into the form, size and shape that conform to customer specifications. Steel service centers allow companies to get service center quality steel while allowing them to focus on their core competencies, which means they can focus their time and effort on the most important components of the business. Another major advantage of the service centers is the fact they have a lower minimum order quantity (MOQ) than the mills. Steel mills often require a customer to buy large quantities which can negatively affect small businesses with little expendable capital. Customers of steel service centers can utilize the pre-processing services offered by the service center including bending, cutting, finishing and several others. This benefits the customers because they do not need to purchase and operate the special equipment required to meet their specifications. The relationships that the service centers have developed with the mills assures their customers of the quality of the steel, as well as providing shorter lead-times caused by exceptional inventory management. 

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