Global Cases

Steel Service Centers Serve as Cornerstones of Manufacturing Worldwide

Japan / China / U.S.A. / Mexico

Sumitomo Corporation runs a total of about 50 steel service centers worldwide to supply steel products to various manufacturers. The center represents an integrated business base to offer a set of functions for inventory management, processing, supply, and financing. We have many years striven for just-in-time delivery of steel materials to a broad spectrum of industries, especially home appliance, housing and construction materials, and automobile, thus underpinning stable operations of these manufacturers, which helps the ”Development of local society and economy.” In recent years, we have enhanced efforts for ”Mitigation of climate change,” by increasing the supply of materials for electric vehicles (EVs), fuel cell vehicles, and other environmentally friendly products.

Just-in-time delivery of steel sheets

The primary role of our steel service centers is to deliver customized steel sheets to manufacturers as they are needed. Customers range from plants producing home appliances and office equipment to those manufacturing auto parts and construction materials. Our centers provide these facilities with steel sheets in the desired shape and volume and according to the desired quality standard.

It was in the 1960s that Sumitomo Corporation first established steel service centers near its customers' manufacturing sites in Japan in order to start just-in-time steel sheet delivery. As our Japanese customers began shifting their plants abroad in the 1970s, the same service was called for overseas, prompting us to globalize our signature steel service centers.

Presently, we have 24 companies operating steel service centers at a total of 46 locations worldwide including in Japan, China and other parts of Asia, North America and Europe processing up to about 7.0 million tons of steel sheets per year.

Salamanca Plant office of Servilamina Summit Mexicana, our Group company in Mexico. Products processed here are supplied to automakers, sustaining the exponential development of the country's automotive industry.

Employees at Servilamina Summit Mexicana's Salamanca Plant

Four functions offered at midpoints in the value chain

Our steel service centers procure steel sheet materials from major steelmakers worldwide to cut and process them as desired by our customers. The centers' primary functions are: (1) managing inventory, (2) processing, (3) supply and (4) financing. We continue to work on strengthening these four functions as we are expected to protect our customers against risks associated with inventory, fluctuations in steel prices, foreign exchange rates and lost productivity due to delayed supply. We also help our customers reduce their working capital demand by granting usance, or a payment grace period. Our steel service centers overseas offer additional functions including customs clearance, tax exemption processing and clearing industry-specific statutory procedures, thus serving as pivotal midpoints in production value chains.

As an integrated trading and business investment company, Sumitomo Corporation has a number of underlying strengths. Its technological prowess, for example, enables prompt response to diversifying customer needs, and its financial resources can be leveraged to invest in businesses and carry inventory. It also boasts integrated corporate strength as demonstrated in groupwide collaborations as well as networking expertise that is utilized in cultivating new business partners. Moreover, it has strong organizational management capacity, which is shared across its numerous Group companies. Our steel service center business is a versatile embodiment of all of these underlying strengths.

Stock yard for base materials transported from steelmakers and ports, respectively, by trucks and cargo trains

Responding to changes in manufacturing and consistently offering high-quality services

Most steel sheets processed at our steel service centers are supplied to the home appliances, office equipment, housing and construction materials, and automotive industries, sustaining Japan's growth industries over many years.

Global automotive production volume has been growing in recent years, exceeding 80 million and 84 million units in 2021 and 2022, respectively. With the annual growth rate set to hover at a few percent, the figure is projected to surpass 98 million in 2025. In addition, automobiles are under pressure to meet higher environmental performance standards by reducing weight to enhance fuel efficiency, among other measures. New types of vehicles are therefore expected to be manufactured in greater volumes, including electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs) and fuel cell vehicles.

Going forward, our steel service centers will continue with their mission to keep providing the high-quality services required by our customers while also catering to their increased production and technological innovations. We must support the manufacturing industry's evolution and entry into a new era by taking on the difficult task of processing, pressing and welding high tensile steel plates and promoting the application of non-ferrous metals including aluminum.

However much the manufacturing industry transforms itself, it cannot survive without the four functions provided by our steel service centers—inventory management, processing, supplying and financing—at midpoints in its production value chains. To contribute to manufacturing worldwide, we will further empower our steel service centers while responding to changes in market needs for materials and processing methods and exploring collaborations with key partners within our group and industrial segment.