SteelScout challenging service centres

Service centre sources are baffled by the competitiveness of Tata Steel's UK "digital steel procurement service" SteelScout.

The site buys various types of steel from more than 70 suppliers and resells to end-users based on inquiries they submit. Rather than matching buyers and sellers, the service pays the supplier for the material and resells, sometimes at more competitive levels than the service centre may supply the same end-user through bilateral business. The site promises to beat any better quotes customers can find elsewhere.

When the material is delivered it arrives on the transport of the service centre that sells to SteelScout, which has caused some issues for stockists when their customers have complained that they can get better prices through the site than off it. One decoiler had to show a customer his invoice from SteelScout to prove he had sold at the same price to the site as he would have direct to the customer, despite the user paying less for it.

One supplier to the site said he receives around three inquiries a week via SteelScout. It is a good way to sell to customers that you would not ordinarily get credit on, however, as it is fully backed by Tata, he said.

Tata has a similar joint venture in India, alongside Sail, called MJunction.

"It makes a lot more sense in India given the market size and the variety of buyers available," one trader said.

Some of Tata's competitors that own service centres have told them not to list material on the site.

A Tata Steel spokesperson said SteelScout is "an exciting new digital steel-buying tool, which aims to streamline and modernise the traditional steel purchasing experience. Like any online sales platform we aim to offer customers the best possible experience, the best service and the best overall value".

A source close to the company said it was established 18 months to two years ago.