The cautious expansion of Reliance Steel & Aluminum in Asia continues this month with their purchase of Singapore’s HLN Metal Centre Pte. Ltd. for approximately $2.6 million. HLN processes and distributes custom machined materials and components for the local electronics, semiconductor, and solar energy markets. Reliance has been an active investor in Asia in recent years. They purchased Everest Metals (Suzhou) Co Ltd near Shanghai in March 2006 and in addition to a distribution operation, they opened another manufacturing operation earlier this year via their HK subsidiary Valex Holdings.
Reliance has been by far the most acquisitive of the US distributors in Asia. Thyssen has a distribution operation near Shanghai and joint venture steel manufacturing operations. But others like Ryerson have preferred to act through representatives rather than take the step of establishing wholly owned operations. TW Metals has operations in China, Korea and Singapore, usually through their nickel alloys subsidiary Philip Cornes rather than as the stainless, aluminum and steel long product supplies they are better known for in the US.
Growth prospects are greater in SE Asia where GDP has been expanding near or at double digit rates for much of the last 4-5 years. In addition, the distributor market is not as well developed as in North America giving western producers with sophisticated supply chain capabilities a strategic competitive advantage. And last but not least those same western manufacturers are increasingly saying to their distributors back home I want the same service for all my global operations, you either set up along side me and service these markets or we will find someone who can.