The Metal Service Center Institute (MSCI) released their Metals Activity Report on Monday morning. When reviewing the total steel market (all products) shipments improved by 17.2% as U.S. service centers shipped 3,210,400 tons for the month of March. In February service centers in the United States shipped 2,661,000 tons.

In spite of the higher shipping rates inventories of steel on the service center’s floors increased slightly from 6,484,500 tons to 6,493,800 tons. At the higher shipping rates service centers now have 2.0 months supply (all products) in inventory (unadjusted). The new seasonally adjusted inventory is at 2.2 months. At the end of February service centers had 2.4 months (unadjusted) and 2.3 months (seasonally adjusted).

Flat Rolled Inventories Now Under 2.0 Month Supply

In the flat rolled steel arena shipment levels increased by 3,700 tons per day from 84,000 to 87,700 tons per day. The new shipping levels represent an increase of 4.3% compared to the February shipment levels. Looking back to last year the new shipment levels are 32.0% higher than in March 2009.

Out of curiosity SMU went back and reviewed the data from 2008 and 2007 in order to compare this latest “jump” in shipments and how close the industry may be to “old normal” levels. In March 2008 service centers shipped 125,000 tons per day while in 2007 the shipment rate was 132,600 tons per day. Current shipment levels are still down 37,300-44,900 tons per day from “old normal” levels.

According to steel analyst Marc Parr, service centers purchased new material at a rate of 89,200 tons per day modestly higher than the 87,700 ton shipment rate but "well within a normalized seasonal pattern."

Flat rolled steel inventories at service centers in the United States increased slightly from 3,733,500 tons at the end of February to 3,766,600 tons at the end of March. Based on the latest shipment rate total month supply of flat rolled inventory dropped from 2.2 months to 1.9 months (unadjusted). The seasonally adjusted inventory levels remained constant at 2.1 months supply.

SMU Market Survey Results Show Service Centers Inventory Levels Balanced

Last week Steel Market Update conducted our steel market survey to both service centers and manufacturers. The results of our inventory inquiries with the service centers (all participate in the flat rolled steel markets) found inventory levels to be slightly above 2.0 months as an average.

The vast majority of service centers reported they were maintaining their inventory levels (72.2%) with only 4.2% reporting they were building inventory while 23.6% continue to reduce inventory levels.