Above: Steel plate products inventory at Olympic Steel Corp.
January, 2026- “Together, we’ll have over $6.5 billion of revenue and … an expansive North American network of over 160 facilities, providing new breadth, new depth of products and processing services as well as a greater ability to offer customized metal solutions.”
That was Richard T. Marabito, CEO of Olympic Steel Inc., soon-to-be president and COO of the new company formed by the merger of Olympic and Ryerson Holding Corp. The merger was announced Oct. 28, and the two companies held a joint conference call a day later. The deal is expected to close this quarter.
Eddie Lehner, Ryerson’s CEO, said the merger “could not be more complementary and synergistic around the products, services, footprint and customer experience that will enhance our market presence. The combination of our organizations will further scale the digital investments that Ryerson has made to bring Olympic Steel’s capabilities and formidable expertise into a larger network and provide our customers with greater network density, faster lead times and a wider array of custom solutions from pick-pack and-ship to finished parts.”
PROCUREMENT
When a buyer goes from from 2 million tons to 2.9 million or 3 million tons of combined purchasing spend, “you pick up scale,” Lehner said during the shareholders call. “If you break this down into math, metal on any given day is between 70 and 95 percent of our cost, depending on the pound you’re quoting and the pound that you sell. It’s really hard to operate your way out of suboptimal buying.”
However, considering the combined scale entering the procurement marketplace, “we’re talking about [potential savings of] $14 a ton over 2.9 million tons. We are highly con dent we know how to get $14 a ton in supply chain synergies, not the least of which follow through to fuller truckloads that we receive from our suppliers,” he explained.
“So we pick up savings not just on the freight, but you’ve got greater options for how to purchase metals, how to combine that spend and where to direct it through a more dense network to bring down your overall procurement costs.”
DOWNSTREAM
One of Olympic Steel’s strategies over the past five-plus years was to acquire and integrate end product manufacturing into the mix. For example, said Marabito, Olympic subsidiaries manufacture industrial hoppers, stainless steel bollards, metal canopies and end products that go into HVAC applications.
A machinery technician for APT at Olympic Steel in Winder, Georgia, working on an unloading and stacking system for a blanking line.
“The end product carries a higher margin and return profile than the traditional service center business. These end products are also countercyclical to distribution margins. When metal pricing declines, service center margins tend to come under pressure, while end product margins have the of selling effect.”
Another advantage of manufacturing downstream products is the use of internal purchasing power and in-house fabricating capabilities. Following the merger, Marabito expects to be able to provide synergies to manufacturing customers “that our competitors at the end market level just don’t have.”
A worker measures cut parts at Ryerson’s Burns Harbor, Indiana, service center.
‘IT SELLS’
Lehner suggested that industry observers drill down to look at drivers creating the financial statements for metals companies. “Think about the importance of selection, availability, lead time and on-time delivery,” he said. “We have great brands. But when the customer calls or e-mails us for a quote, if we have it on the floor, it sells. If we can create short lead times, it sells. If we have wider selection, it sells. We can buy out [stock] from one another, making it easier to make that sale. If we can use each other’s outside processing network, it makes it easier to create that sale.”
The combined company can ensure “greater reliability and consistency in how we make those connections with our customers,” said Lehner.
Ryerson acquired Excelsior Metals in California in 2022 (shown), which performs downstream processes like fabrication and machining.
’PRIMED’
Marabito told shareholders that the two companies over the last three years invested “a massive amount $480 million. What that means is we are both now primed to reap the returns on these investments. The benefit of a merger is we’re going to get there faster through a larger combined platform.”
Olympic Steel is known for its capabilities with carbon steel flatrolled sheet and plate, as well as stainless products and tubing.
Olympic’s investments include a cut-to-length line in Minneapolis, aimed at coated carbon steel coils; a white metals cut-to-length line in Chicago; a high-speed specialty stainless slipper at Berlin Metals in Indiana. In Chambersburg, Pennsylvania, Olympic started up “a massive automation project, which includes all new lasers and plasma processing equipment and capacity, coupled with material handling automation,” Marabito said. Action Stainless also expanded in Houston.
“All these projects are poised for returns in the 2026-2028 time frame,” he predicted.
When companies launch big projects to modernize, “they don’t all go beautifully,” Lehner acknowledged. “You have to grind through it but it’s worth it. As we’ve gone through this [demand] downturn, which has lasted three years, we’re due for some tailwinds.”
In the past few years, Ryerson’s main plant moved out of Chicago into a new 900,000- square-foot service center in University Park, Illinois, and built up its Shelbyville, Kentucky, facility, “which was a fantastic investment in our nonferrous franchise that’s located close to the bread basket of nonferrous supply in the United States.”
DIGITAL TRANSFORMATION
Lehner cited the release of ryerson.com 3.0 as it moves “further and further into digital commerce.” With the merger, those digital investments will be implemented “at scale in a very thoughtful way.” Ryerson also “took a big swing on ERP integration.” For example, “in our South region and in Texas, we were on legacy systems for 40 years, and we converted to a uniform ERP system.” It represented two to three years of difficult effort. “But once you come through it, everybody knows that language and they find possibilities and capabilities they didn’t have before within that system to create a better customer experience.”
The combined company would have 160 locations from Canada to Mexico.
FASTER, MORE EFFICIENT
Michael Edheimer, investment banking analyst for the Stout Metals Team in Chicago, said he believes this deal “instantly establishes the new company as the No. 2 affer Reliance Inc., which gives market leverage and influence over supply chains. This merges two massive operations into one incredibly dense, efficient system. That allows them to move material faster over a larger geographic area and leverage a deeper bench of processing capabilities than many regional competitors.”
By consolidating overlapping regions, says Edheimer, the merger “improves pricing, logistics, delivery times, inventory allocation and operational efficiency, which puts pressure on smaller distributors. It does not eliminate competition but raises the stakes and makes scale and efficiency the driver of success in the service center space.
“We remain bullish on continued consolidation,” he says. “Both service centers and manufacturers are looking to reshore production and improve technological prowess, especially in light of tariffs and volatile steel pricing.”
The merger will increase the new entity’s purchasing power. “By aggregating demand across Ryerson and Olympic, the company can allocate purchases during tight supply, have first crack at the rolling schedule, negotiate better contract pricing and obtain specialty grades that maybe smaller buyers could not get within a certain timeline.”
Other perks include being able to strategically buy forward, optimize working capital and maintain high service levels. “This is a more strategic partner to a mill rather than just going by pricing on each account,” Edheimer says.
MEGA DEALS
Andy Pappas, managing director and head of ABL Special Industries Group at BMO, Chicago, notes that what’s happening in the service center space now has been happening for a time, “but now it’s getting to some of the larger players.”
For example, he cited Worthington Steel’s announcement Dec. 6 that it was talking to Kloeckner about possibly merging, as well as the Ryerson and Olympic Steel announced combination.
“All industries go through consolidation. The metal service center space is no different. Consolidations are occurring to diversify their businesses by region/territory, product line, end-markets and customers. The market has tried to do different things to grow earnings and grow these businesses,” including peer-to-peer mergers, downstream applications, diversification of the product line and/or the customer base.
“What’s new now is consolidation is happening with some of the largest metal service centers. These mega service centers are very diversified but the combination will yield significant cost savings, as they have laid out in their public announcements” says Pappas. “There are many service centers that overlap; why not grow at the upper end?”
He says these companies are exceptional at what they do, which should not affect customers while quality and availability are likely comparable. The improved efficiencies from these vendors will make them better managed and more efficient with their clients. “The service center space is a very competitive market; thus I don’t think it will necessarily mean higher pricing for the ultimate customer.”
These announced mega deals, if and when they get done, should not dramatically change the landscape, Pappas says. “We are upbeat about acquisitions like this. This should be viewed as positive for the industry.
“The trend to consolidate will continue,” he predicts. “Smaller to midsize service centers may find it harder to compete, but it depends on the strength of their customer relationships. Depending on the end market, some of the giants will have more capacity to do more for the customer and drive more volume, especially during difficult periods. Smaller to midsize companies have more trouble handling the ups and downs.”'
Edheimer says such mergers could lead to some capacity rationalization “if there are redundant operations or older, obsolete equipment.” However, widespread closures are unlikely because delivery is so time sensitive, because of tariffs and being able to get product fast.
“My takeaway is that this is a defining moment.” The Ryerson-Olympic merger “creates a national scale, deep processing capacity and meaningful purchasing leverage at a time when the supply chain has to be responsive. This deal is not just about getting bigger, but about building a more efficient, capable and resilient supply chain partner.”
