SMU Data and Models

Service Center Flat Rolled Steel Inventories Still Healthy

Written by John Packard


The following analysis of the number of months of supply being held by flat rolled steel distributors is intended for SMU Premium level members. We are sharing this report with all of our readers during the first year of the index, after which it will be available for Premium members only.

Shortly after the month of February ended, Steel Market Update began canvassing the service centers registered to participate in our inventories index. Earlier this month, we produced a “Flash Report” based on just under 50 percent of the distributors responding. Our Flash Report found the number of months of supply as being down 0.10 of a month.

At that time (March 7), 45 percent of the service centers reported lower inventories, while 40 percent increased their inventory levels and 15 percent reported inventories unchanged compared to the prior month.

We have concluded our full analysis for the month of February and have found average inventories at steel distributors have dropped from 2.9 months of supply to 2.8 months. Inventories are at comfortable levels, although that is expected to change in the coming months due to the lack of foreign steel associated with the Section 232 tariffs.

In our final analysis we had 44 percent of the responding service centers reporting their inventories as being lower than the prior month, 29 percent were higher and 27 percent were unchanged.

Here is what our respondents had to say during the process of discovery (most of the comments were made prior to the announcement of steel tariffs):

• “We are raising prices based upon mill pricing, but our customer demand is not as strong as last year. The panic hasn’t set in yet with our customers.”

• “Our inventories came down in February to 5.9 months from 6.1 months in January. The February shipping rate was very good, with early demand in March looking very good, as well.”

• “We have customers on allocation to prevent hedge buying.”

• “I had a lot of late orders. I wonder if different parts of the country saw similar things (meaning did AZ/CA see lower inventories due to late orders?).”

About the SMU Service Center Inventories Index

All data providers are flat rolled steel service centers located in the United States. We are also gathering information from plate distributors, but we are not yet ready to provide a separate index on plate as we need to add more distributors to our list of data providers.

The information collected is confidential, including the name of the participating service centers. In some cases, Steel Market Update has signed confidentiality agreements. We are looking for more steel distributors who carry either prime flat rolled or plate steels to become data providers. You can become a provider by contacting John@SteelMarketUpdate.com or by phone at 800-432-3475.

We produce two reports from the data collected: a “Flash Report” and a full report. The Flash Report is produced within a few days from the last day of the month based on approximately 50 percent of the data providers supplying information. We then produce our full report on or about the 14th day of the new month.

The results of this index are intended for our Premium level members only.

Our report has nothing to do with the Metasl Service Center Institute (MSCI), which produces its own inventories and shipment report around the middle of the month.

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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 company would like to have your voice heard in our future surveys, contact info@steelmarketupdate.com.