Steel Mills

Flat Rolled Inventories at Highest Levels Since October 2008

October 16, 2014

The Metal Service Center Institute (MSCI) reported steel shipment and inventory data for U.S. and Canadian service centers earlier this week.

The headline you will read in most periodicals is inventories rose even with steel shipments rising by 8.3 percent over last year and 1 percent over the prior month. However, the headlines are speaking to total steel shipments (all products) and not just flat rolled.

Total steel shipments for the month of September totaled 3,661,300 tons which was a daily shipment rate of 174,300 tons per day. This is well above the 169,000 tons per day we saw during September 2013.

Months of total steel inventories on hand are 2.6 months on both a seasonally and non-seasonally adjusted basis. The 9.3 million tons is the highest steel inventory level we have seen since October 2008 (when the market crashed).

Carbon Flat Rolled

Flat rolled shipments increased to 111,700 tons per day with total flat rolled shipments equaling 2,345,800 tons (64 percent of total steel shipments were flat rolled). Shipments are up 6.3 percent over the prior year and the daily shipment rate dropped by 400 tons per day compared to August 2014.

Distributors held 5,621,800 tons of flat rolled inventories at the end of September. This is 19 percent higher than what was held at the end of September 2013. The number of months on hand rose to 2.4 months on both a seasonally and non-seasonally adjusted basis.

Service centers received 122,771 tons per day of steel versus shipments of 111,700 tons per day. There were 21 shipping days during the month of September 2014.

For those of you who are Premium level customers you will note that we hit our forecast and we now see service center flat rolled inventories as being in excess (by 256,000 tons) based on our proprietary model and we expect inventories to continue to build over the next few months. The biggest reason being an adjustment we are making in our numbers to accommodate the large influx of foreign steel at the ports (and arriving in the near future). We will have a special report for our Premium level members on Friday of this week as we forecast shipments and inventories for the next few months.

Carbon Plate

Distributors shipped 385,100 tons of plate products during the month of September with an average daily shipment rate of 18,300 tons per day. This represents a 15.3 percent improvement year-over-year while the daily shipment rate was up 200 tons per day compared to August 2013.

Inventories of plate stood at 1,239,900 tons as of the end of September. This is 25.4 percent higher than September 2013. The number of months continued to grow and now stand at 3.2 months on both a seasonally and non-seasonally adjusted basis.

Pipe & Tube

MSCI reported distributors as having shipped 244,600 tons of pipe and tubular products during the month of September 2014. This represents an increase year-over-year of 10.1 percent. The daily shipping rate was 11,600 tons per day, up 300 tons per day from the prior month.

Pipe and tube inventories stood at 679,500 tons which is actually lower than what we saw at the end of September 2013. The number of months on hand stood at 2.8 months on both a seasonally and non-seasonally adjusted basis.