On Wednesday, Reliance Steel
Like fellow steelmakers Steel Technologies
Moreover, Reliance is making its money the old fashioned way: without putting the screws to its customers. In a story published earlier this week, I described how Steel Dynamics
Reliance, on the other hand, has entered long-term supply contracts with very few of its customers. So when prices on the raw materials that Reliance uses rise, Reliance is free to pass on the additional costs (and perhaps tack on a bit of profit, one might suspect) to its customers.
And that is only fair. Those customers could have passed the risk of higher raw materials prices on to Reliance, in exchange for the security of knowing how much they would pay in the future. They chose not to.
Investors should not count on today's seller's market for steel makers continuing indefinitely. Nothing does. But if you are looking for a reliable investment, a company that treats its customers fairly is a good place to start.
Fool contributor Rich Smith has no interest in any of the companies mentioned in this article.