Commercial Metals Co's Comment on Sales, Marketing and Customers
We purchase steel products, industrial minerals, ores, metal concentrates and
ferroalloys from producers in the U.S. and international markets. We utilize long-term
contracts, spot market purchases and trading transactions to purchase materials.
To obtain favorable long-term supply agreements, we occasionally offer assistance
to producers by arranging structured finance transactions to suit their objectives.
We sell our products to customers, primarily manufacturers, in the steel, nonferrous
metals, metal fabrication, chemical, refractory, construction and transportation
industries. We sell directly to our customers through and with the assistance
of our offices in Irving, Texas; Fort Lee, New Jersey; Sydney and Melbourne,
Australia; Singapore; Bangkok, Thailand; Luxembourg; Kürten, Germany; Cardiff,
Wales, United Kingdom; Temse, Belgium; Hong Kong; Beijing, Guangzhou and Shanghai,
China. We have representative offices in Moscow, Russia and Klang, Malaysia,
and we have agents located in significant international markets. Our network
of offices share information regarding the demand for our materials, assists
with negotiation and performance of contracts and other services for our customers
and identifies and maintains relationships with our sources of supply.
We sell scrap metals to steel mills and foundries, aluminum sheet and ingot
manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary
lead smelters, specialty steel mills, high temperature alloy manufacturers and
other consumers. Ferrous metal is the primary raw material for electric arc
furnaces, such as those operated by our Americas Mills segment and other minimills.
Some minimills periodically supplement purchases of ferrous metal with direct
reduced iron and pig iron for certain product lines. Our Irving, Texas office
coordinates the sale of substantially all scrap metals from our metal processing
facilities to our customers. We negotiate export sales through our global network
of offices as well as through our Irving, Texas office.
Fabricated steel products are used primarily in the construction of commercial
and non-commercial buildings, hospitals, convention centers, industrial plants,
power plants, highways, bridges, arenas, stadiums, and dams. Generally, we sell
fabricated steel in response to a bid solicitation from a construction contractor
or from a project owner. Typically, the contractor or the owner of the project
awards the job based on the competitive prices of the bids and does not negotiate
with the bidders individually.
We believe we are one of the largest marketers of imported steel in Australia.
Despite focused efforts and substantial progress to stabilize and improve the
results of the Australian distribution business, we determined that achieving
acceptable financial returns would take additional time and investment. In the
first quarter of fiscal 2015, we made the decision to exit our steel distribution
business in Australia.