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Supplier-competitor squeeze
What it is
The structural bind of buying your main input from a company that also competes with you in the finished product. Integrated steel mills supply HRC to independent cold rollers and galvanisers, then sell coated product into the same market
The integrated player sets the input price and the output price simultaneously
Impact on industries
- Margin is squeezed from both directions and the squeeze tightens precisely when the integrated player wants share
- Supply security is conditional - in a tight market the integrated mill serves its own downstream operations first
- The independent's defence is service, niche grades, geographic reach and speed, where a large mill's scale works against it
- Trade remedies on imported HRC help the integrated supplier and hurt the independent buyer, so protection deepens the asymmetry