SMU Data and Models
Service Center Flat Rolled Apparent Inventory Deficit Shrinks
Written by John Packard
July 19, 2017
After a careful analysis of the Metals Service Center Institute (MSCI) carbon flat rolled shipment and inventories data, and then applying that data to our proprietary Apparent Excess/Deficit inventories model, we have determined that distributor inventories improved during the month of June.
At the end of May, based on the MSCI data, SMU calculates that service centers had an 800,000-ton carbon flat rolled inventories deficit. Looking at the data just released for the month of June, the deficit continues, but it has dropped to -525,000 tons.
Looking at our original forecast for the month of June, we forecast shipments of 2,316,000 tons. We were very close as shipments came in at 2,300,000 tons.
At the same time, we forecast inventories of carbon flat rolled to be 4,652,000 tons at the end of June. Inventories, according to the MSCI, were 4,467,000 tons.
Our original forecast was for the Apparent Deficit to drop to -358,000 tons. We got the direction correct, but we were slightly too optimistic.
SMU Forecast for July 2017
We are continuing to use the same formula. Using a three-year average month-to-month change, our forecast calls for a continued drop in the Apparent Deficit. We anticipate that it will drop to -232,000 tons by the end of July. As you can see by the table below, we are forecasting shipments of 1,971,000 tons and end-of-July inventories to be 4,589,00 tons. We believe service centers will continue to grow their inventories through the end of the year.
John Packard
Read more from John PackardLatest in SMU Data and Models
Steelmaking raw material prices ease in July
The majority of steelmaking raw material prices declined in June, following the same trend seen in May, according to SMU’s latest analysis.
SMU price ranges: HR declines moderate. Are we near a bottom?
SMU’s sheet price ranges slid again this week. But the declines were more pronounced on tandem products whereas prices for hot-rolled coil held roughly steady.
Some SMU Key Market Indicators improve, others remain near historic lows
SMU’s Key Market Indicators include data on the economy, raw materials, manufacturing, construction, and steel sheet and long products. They offer a snapshot of current sentiment and the near-term expected trajectory of the economy. All told, nine key indicators point lower, 16 are neutral, and 13 point higher. One thing worth noting: The nine indicators pointing lower are all lagging indicators. Many of those pointing upward are leading indicators.
SMU survey: Steel Buyers’ Sentiment Indices rebound
SMU’s Steel Buyers’ Sentiment Indices both saw improvement this week. Current sentiment ticked higher but remains near the four-year low seen earlier this month. Future Sentiment continues to indicate that buyers are optimistic for future business conditions.
SMU market survey results now available
The latest SMU market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Historical survey results are also available under that selection. If you need help accessing the survey results, or if your […]