SMU Data and Models
SMU Service Center Apparent Excess/Deficit Inventories Forecast
Written by Brett Linton
March 6, 2018
Steel Market Update forecast that flat rolled steel shipments from U.S. service centers would rise from 87,805 tons per day in December to 109,083 tons per day in January. The Metals Service Center Institute (MSCI) reported last week that sheet distributors shipped 105,109 tons per day. Our shipment forecast accuracy continues to be high, off by just 3.6 percent in January.
On a monthly basis, our forecast called for total shipments to rise from 1,756,000 tons in December to 2,400,000 tons in January. The final figure was 2,312,000 tons.
Receipts coming into the service centers has been harder to predict. SMU forecast daily receipts to rise from 96,895 in December to 121,849 tons in January. They rose at a much lesser rate to 102,650 tons. Total receipts were forecast to rise from 1,938,000 tons in December to 2,681,000 tons in January, and MSCI reported them to be 2,258,000 tons.
SMU forecast total inventories would rise from 4,990,000 tons in December to 5,271,000 tons in January. MSCI reported total inventories at 4,936,000 tons in January. Our forecast was off due to our overestimation in steel receipts.
At the end of December, our proprietary model calculated that the domestic flat rolled service centers had 126,000 tons of excess inventories on their floors. We predicted the excess would grow to 222,000 tons by the end of December. However, with the lower receipts, we found the excess remained relatively stable at 103,000 tons.
February Forecast Calls for a Deficit in Inventories
Our adjusted forecast calls for a decrease in total U.S. service center shipments to 2,092,000 tons of flat rolled steel during the month.
Based on our new formula for receipts, we are calling for total inventories to fall to 4,859,000 tons in February.
With the change in the model, our new forecast is for U.S. service centers to be holding a deficit of -235,000 tons through the end of February and for that deficit to grow throughout the summer months.
Here is what the full forecast looks like through July 2018:
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
SMU Steel Demand Index falls to an eight-month low
Steel Market Update’s Steel Demand Index fell eight points, and back into contraction territory, an indication demand might be slipping as prices have trended lower, according to our latest survey data.
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 […]
SMU survey: Steel Buyers’ Sentiment Indices fall
SMU’s Steel Buyers’ Sentiment Indices both declined this week, with Current Sentiment tumbling over 10 points, according to our most recent survey data.
SMU survey: HR, CR, and plate buyers find mills more flexible on price
Hot rolled, cold rolled, and plate buyers said mills are more willing to talk price on spot orders this week, while the overall negotiation rate for products SMU surveys remained level, according to our most recent survey data.
SMU survey: Lead times slip for most sheet and plate products
Most steel products tracked by SMU saw lead times contract this week from two weeks earlier, according to SMU’s most recent survey data.