Company: ZEUS
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001437749-25-004742
Chunk: 101

Company: OLYMPIC STEEL INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1
Chunk 101
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 at the time we place our orders, with some fixed-price purchase agreements that support fixed-price sales agreements. We enter into pass through nickel swaps at the request of our customers in order to mitigate our customers’ risk of volatility in the price of metals. The swaps are settled with the brokers at maturity and the economic benefit or loss arising from the changes in fair value of the swaps is contractually passed through to the customer. When metals prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and earnings as we use existing metals inventory. When metals prices increase, competitive conditions will influence how much of the price increase we can pass on to our customers.

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Suppliers

We concentrate on developing supply relationships with reliable high-quality domestic and international metals producers, using a coordinated effort to be the customer of choice for business critical suppliers. We employ sourcing strategies that maximize the quality, production lead times and transportation economies of a global supply base. As a result of our sourcing strategies, approximately 90% of the steel we purchase is from domestic suppliers; thus, limiting our exposure to the inherent risk of foreign supply chains, such as the lead time, valuation and foreign policy risk. We are an important customer of flat-rolled coil and plate, pipe and tube for many of our principal suppliers, but we are not dependent on any one supplier. We purchase in bulk from metals producers in quantities that are efficient for such producers. This enables us to maintain a continued source of supply that we believe is competitively priced. We believe the access to our facilities and equipment, and our high quality customer services and solutions, combined with our long-standing prompt pay practices, will continue to be important factors in maintaining strong relationships with metals suppliers.

The metals producing supply base has experienced significant consolidation, with a few suppliers accounting for a majority of the domestic carbon flat-rolled steel market. We purchased approximately 38% and 40% of our total metals requirements from our three largest suppliers in 2024 and 2023, respectively. Although we have no long-term supply commitments, we have a long history with many mills and believe we have good relationships with our metals suppliers, resulting in competitively priced materials and timely deliveries. If, in the future, we are unable to obtain sufficient amounts of metals on a timely basis, we can also look to alternative sources but these may be at less competitive prices. In addition, extreme material interruptions or reductions in our supply of metals could