Why Don’t We Stock Steel Plates in Singapore?

Steel plates in Singapore Exhibition

Senay with Julaimi from Profab and our steel plate exhibition stand at OSEA in Singapore

Last week we had a booth at OSEA, the big oil and gas exhibition in Singapore. People kept asking two questions. First they looked at the steel plates that we had on the stand – some of them 300mm thick and asked “Are they real?” Then they asked “Why don’t you stock steel plates in Singapore?

Stocking Steel in Singapore

As a salesman I would like to keep a stock of steel plates in Singapore. I would be able to sell a lot more plates. Or so it seems. My delivery time would decrease from 5 weeks to just a few days and that would surely be good….

There are a few problems with this idea and I’ll try and explain them. The first is that we’ve seen a lot of European steel stockholders come to Singapore. Then we’ve watched them leave – often trying to sell their steel at a discount price.

Part of the reason for this is that the plates they selected to stock competed directly with the major stockholders in Singapore and could only compete on price. Without scale economies and with a number of years of suppressed demand they couldn’t operate profitably. We don’t want the same to happen to us.

Secrets of Stockholding

More importantly a lot of the art of steel stockholding comes down to determining the right amount of steel to buy. I don’t do that part so I can’t give away too many secrets but the basic principle is this. If a customer comes to you and wants x pieces and you only have y you lose the sale. So if he wants 10 150mm EH36 plates and I only have 9, my competitor will book the order.

So if I stock in Singapore this is something that I have to consider. I need to have enough plates, considering the time it takes to restock, to be able to consistently meet customer requirements. If I am 1% short then I lose 70% of the sales. Ouch!

Critical Mass of Heavy Steel Plates

And when we look at places that require high performance steel plates I have to consider the Middle East and Texas as well as Singapore. The same logic applies to each of these locations. So instead of splitting the cash that we have available to invest in plate four ways (Houston, Singapore, Dubai and Netherlands) we concentrate it in one place.

That means that in our 20,000 m2 Oosterhout warehouse we have one of the largest stocks of heavy plate in the world. Because we concentrate we have ensured that we are able to offer customers a much much wider selection of heavy plates than would otherwise be possible.

More Plates, Heavier Plates

So we make the trade off of choosing to give you a better price and more choice – against a longer delivery time.

The final reason is that our plates are heavy. With many of our plates weighing 15, 20 or even 25 tonnes we need to spend almost 10 times as much as stockholders who focus on thinner plates to have the same number of plates. That means the amount of tonnes of steel we have in stock is very large compared to the number of plates

At OSEA the 26 plates that we displayed came to 467 tonnes. As to the plates – were they real? Well if they had been we’d have exceeded the load bearing capacity of the floor by a factor of 4. So you wouldn’t have seen either our booth – or the one on the floor below!

Structural failure

Structural failure from inadequate foundations being built in mud. How it stayed in one piece as it fell over….

 

Steel Plate Delivery to Singapore

Whilst we don’t have any plates on site we do have a number of options

Container vessels take 4 – 5 weeks for 2m wide plates.

Wider plates can go on a conventional vessel taking 2+ weeks longer or pay more to be flat racked.

If you are flush with cash, or the deadline is too extreme, it can go by air. That’s about comes to about 3 times the cost of the steel!

Comments

  1. Patrick Lim says:

    Dear Denis

    The requirement for such thick plates are mostly for project fabrications and it would be someone who is out of his mind, to keep stock of such thickness.what is the turn around of such thickness?

    To keep stock , you should be looking at stock turnaround of at least 3 times a year and if you were to stock such thickness, you would be lucky if you have a turn around of 1 per 2 years….
    Sales People would only want as much stock as possible but when questioned as to why the stock is not moving, the simple excuse would be “Market is quiet at this moment…economy down etc.” If you were to calculate the interest rate for the stock plates, you were be surprised that if you don’t sell it within 6 months your costs would increase…..of course if its not my investment, go on keep as much stock as possible…

    another thing is can you imagine who has the forklift or overhead crane to lift up a plate of 15tons? You need a crane and the charges for the crane is by the hour…..and you need a low bed truck to truck them to the customer’s yard and at the yard, you need to book a crane…..unless it is a firm project you have no choice…and fabricators should know that such thick plates needs to be ship in and when they are bidding for the job, they should calculate the time frame….Best of luck Denis

    • Hi Patrick,

      Some good points there. One of the key ones, as you mention, is the stock turn. In Asia, given the pace of economic development, it is much faster than Europe.

      I’ve heard figures for stock turn for Singapore based stockists of 6 times a year. In Europe twice a year is considered good. I know German stockholders who will buy special plates that they expect to turn over every 4-5 years on the expectation that they will be able to charge significantly above market rates because they have no competition.

      From my reviews of balance sheets over the years it appears that most European stockholders finance their inventory from retained profits whereas Asians are more debt financed. This reflects the different stages of the economies and means that there are different ROI expectations.

      When it comes to cranes and lifting I have been surprised. We have a number of 25 MT cranes in our yards. Most of my customers have between 15MT and 100MT cranes. This is because the contribution of any individual plate, whatever the weight, is small compared to the end product they are fabricating.

      That said one port was unable to unload a heavy plate from a container as they didn’t have a suitable forklift!!!!

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