Census Data Positive for Steel Mill Shipments, Inventories

Written by Peter Wright

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Steel mill shipments are up while the shipment-to-inventory ratio is down, according to Steel Market Update’s latest analysis of Census Bureau data.

This is an alternative data source for steel product shipments and inventories. The Census Bureau provides monthly data on inventories, shipments and new orders for total U.S. manufacturing, as well as for individual industries, one of which is steel products. Total shipments and inventories are reported in millions of dollars, seasonally adjusted. It seems to us that this data is much more credible than that available from the industry associations.

Steel shipments and inventories are increasing as the inventory-to-shipment ratio is decreasing and new orders have exceeded shipments each month through July in 2018.

Results for July were released on Sept. 5. Figure 1 shows monthly shipments in millions of dollars since 1992 with the year-over-year growth. Shipments are up by 18.2 percent year over year and by 38.1 percent since January 2016. However, they are still not back to the level of 2011 through 2014. Year-over-year growth has been in double digits since February 2017 as shown by the brown bars in Figure 1. The Census Bureau defines shipments as follows: “Manufacturers’ shipments measure the dollar value of products sold by manufacturing establishments and are based on net selling values, f.o.b. (free on board) plant, after discounts and allowances are excluded. Freight charges and excise taxes are excluded. Multi-industry companies report value information for each industry category as if it were a separate economic unit. Thus, products transferred from one plant to another are valued at their full economic value.”

Figure 2 shows shipments and new orders on a monthly basis for all steel products. New orders have exceeded shipments every month in 2018. 

Figure 3 shows the same total shipment line as Figure 1, but now includes the inventory-to-shipment ratio. An excellent trend on both counts.

Figure 4 shows total inventory in millions of dollars and repeats the inventory-to-shipment ratio shown in Figure 3. Since July 2016, total inventories through July 2018 grew by 16.6 percent, and the inventory-to-shipment ratio declined from 2.09 to 1.83 in that time frame. The ratio is down from 2.26 in January 2016.

SMU Comment: We try to review several different sources of comparable data to verify our conclusions and have been dissatisfied with industry shipment and inventory data from recognized sources for quite a while. This Census Bureau data looks more believable.

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