This report compares domestic mill shipments and total supply to the market. It quantifies market direction by product and enables a side by side comparison showing the degree to which imports have absorbed demand. Sources are the American Iron and Steel Institute and the Department of Commerce with analysis by SMU.
Table 1 shows both supply and mill shipments of sheet products (shipments includes exports) side by side as a three month average for the periods August through October for both 2014 and 2015.
Comparing these two periods total supply to the market was down by 10.2 percent and shipments were down by 5.7 percent. These numbers have reversed from the situation in recent months when shipments declined much more than supply because imports took an increasing market share. Table 1 breaks down the total into the individual sheet products and it can be seen that for the big three items, HR, CR and HDG, shipments all fared better than supply. Supply of hot rolled was down by 14.0 percent and shipments were down by 10.3 percent, cold rolled supply was down by 12.5 percent as shipments were down by 5.8 percent. HDG shipments increased slightly as supply was down by 6.7 percent.
This means that in all three cases imports gave up some ground. Electro-galvanized lost ground to imports as supply was up by 1.1 percent and shipments were down by 11.7 percent. Electro-galvanized enjoys a trade surplus which weakened in October. Other metallic coated products (mainly Galvalume) bucked the trend and continued to have positive growth in both supply and shipments with 13.9 percent and 7.2 percent respectively. A review of supply and shipments separately for individual sheet products is given below.
Apparent Supply is a proxy for market demand and is defined as domestic mill shipments to domestic locations plus imports. In three months through October 2015 the average monthly supply of sheet and strip was 4,599,000 tons, down by 10.2 percent year over year as mentioned above. In the last three months supply was down by 3.4 percent compared to May through July and down by 10.2 percent year over year. The short term decline is less than the long term which means that the decline is slowing. Table 2 shows the change in supply by product on this basis through October.
There is a big difference between products. Galvalume looks good on all three time comparisons. HR, CR and HDG declined in all three time comparisons though the decline is slowing. Electro galvanized had a very strong month in October which resulted in a positive 22.0 percent growth in 3 months year over year.
Figure 1 shows the long term supply picture for the three major sheet and strip products, HR, CR and HDG since January 2003 as three month moving averages.
Hot rolled declined every month November through April then picked up in May, June, July and August before declining again in September and October. Cold rolled also declined in November through April, picked up more slowly in May through August and also declined in September and October. Hot dipped galvanized also experienced a decline in September and October. In Q4 2014 all three were in higher demand than at any time since the recession. That is no longer the case for any of them though HDG is close.
Figure 2 shows import market share of sheet products and includes long products for comparison.
Based on a 3MMA the import market share of sheet products was 21.3 percent in October, down from 21.9 percent in September and lower than at any time since June last year. The months November and March had the highest import market share since the beginning of the recovery. Import market share of long products in October was 26.1 percent, up from 25.1 percent in September and down from the peak of 29.4 percent in April this year.
Mill Shipments. Table 3 shows that total shipments of sheet and strip products including hot rolled, cold rolled and all coated products were down by 5.7 percent in 3 months through October year over year but up by 2.1 percent comparing three months through October with three months through July.
All the numbers in this report illustrate why it’s necessary to look at different time periods to get the whole picture. Individual products performed quite differently with other metallic coated faring the best and electro-galvanized the worst. Figure 3 puts the results for the three main products into the long term context since January 2003.
SMU Comment: Based on performance since the recession, steel demand is still trending up for HDG but not for HR or CR which have been more or less flat lined for four years. We believe that manufacturing accounts for about 60 percent of steel consumption in the US and that figure is higher for sheet products than for longs. Import market share is still very high, longs being even worse than sheet products. However imports are no longer in the driver’s seat when it comes to absorbing market share. It is evident as we write many of the reports for publication in the Steel Market Update newsletters that it’s possible to slant an analysis anyway we want based on the time periods being examined. For that reason we always provide tabular data with quantitative short time period comparisons as well as graphical analysis of a much longer time frame. We hope this gives you the reader the best picture of what is going on.
Peter WrightRead more from Peter Wright
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