In some very thick flat rolled applications, such as heavy plate, starting from an ingot is the only way to go. The ingot allows for several hot rolling reduction passes, and thus, the necessary internal structure to the steel imparted by rolling.Semifinished steel of any shape can also be forged. Forging is chosen for steel that will eventually be subject to high stresses. Examples of forged steel applications might be turbine shafts of over 100 tons or a conveyer roller of only a few pounds. All methods of forging squeeze, pound, or “knead” the steel into a very dense, strong, and hard structure fairly close to its final shape.

Processors and Service Centers

The major steel mills focus primarily on large-volume runs of standard widths and gauge tolerances, and their natural customers are large-volume users, such as automotive, appliance, and construction customers. Many end-use customers, however, require smaller volumes, more precise delivery schedules, and more specific lengths, widths, gauge, shape, metallurgical structure, and surface qualities than the major mills offer. Those end users also cannot justify carrying large amounts of inventory, or investing in equipment that may be only partially utilized.

Somewhere between the major mills and many end-use customers lies a need for an intermediary to perform services such as breaking bulk material into smaller lots; processing commodity-like grades into material with specific size, shape, and metallurgical characteristics; and distributing material on a timely basis. The international stock market categorizes these various companies as service center or processor based on the majority of a company’s business. It is important to note, however that the descriptive distinction between service centers and processors can blur as service centers offer more general lines of processing and as some processors offer more inventory and distribution services. 

It is also important to note that each portion of the service offered will garner a price meant to cover the cost of that service plus a small profit. As would be expected,the distribution side of these companies will focus on turning inventory as quickly as possible; as more processing equipment capabilities are added, however, management focus turns to utilization as a profit-margin driver