Clear Business Case

What is Applied Value and what is its history?

Stenbeck co-founded AV with Grant, after he grew frustrated with many of the other consultancies out there whose advice would often cost millions, yet leave his enterprise with little in terms of bottom-line impact by the time they had finished their work. The pair hoped that AV would change that narrative. The practice has since evolved into a fully independent boutique management consultancy focused on cost and capital efficiency, while driving a fact-based/practical approach for clients with a ROI-heavy and results-driven mindset.

What kind of services do you provide and what kind of work do you typically do with your clients?

Within sourcing, and specifically steel, we use our industry knowledge to support everything from the creation of world-class steel tools and templates, to negotiations execution with service centers and mills, to setting up Managed Buy programs, developing customized risk mitigation strategies, and running VA/VE programs for our clients. As it’s part of our DNA, we’re heavily focused on the execution component and making sure the savings reach the bottom line, so that the majority of our sourcing projects are clear business cases.

As part of this, we developed our own steel sourcing cloud solution called Sourcing Value, which we launched recently with a few of our clients.

What is your take on the steel market right now and where is it heading?

A: We bore witness to the supply/demand imbalance-driven craziness in 2021. That being said, we’re starting to see a softening of the market. Lead times are plunging, inventories are rising and for hot-rolled coil at least, there are plenty of deals to be had right now, as mills and service centers alike seem more willing to negotiate than they were a few months ago. With Section 232 tariffs being replaced with quotas in January, coupled with the expectation that the semiconductor shortage isn’t resolving itself anytime soon, we expect continued downward movement during the first half. We would caution that things are likely to level out later on in 2022, with the U.S. infrastructure bill and potential automotive recovery driving additional steel demand.

For other steel commodities like cold-rolled coil, hot-dip galvanized and plate, the market is still a little tight at the moment. That being said, deals can be had and there’s a bit more maneuverability on price than during most of 2021. Overall, we’re seeing strong demand and constrained availability, depending on who you talk to. Applied Value is generally advising clients to use CRU or scrap+ based deals for 2022. Finding good fixed/hedged offers are the exception right now, rather than the rule, although this entirely depends on the ability of clients to pass the current pricing onto their own customers.