Shipments and Supply of Steel Products Through December

Written by Peter Wright

In three months through December, demand for total rolled products declined by 6.1 percent.

This Premium analysis by Steel Market Update is based on steel mill shipment data from the American Iron and Steel Institute (AISI) and import-export data from the U.S. Department of Commerce (DOC). It is meant as a more in-depth look compared to the apparent steel supply articles published in our Executive newsletters. 

The analysis summarizes total steel supply by product from 2008 through December 2019 and year-on-year changes. The supply data is a proxy for market demand, which does not take into consideration inventory changes in the supply chain. Our analysis compares domestic mill shipments with total supply to the market. It quantifies market direction by product and enables a side-by-side comparison of the degree to which imports have absorbed demand.

Figure 1 shows that the robust growth of U.S. raw steel production that occurred in 2018 reversed in 2019. But since the week ending Oct. 5, there has been an improving trend leading to 1.6 percent year-over-year growth through Feb. 8. This is a four-week moving average and is based on weekly data from the AISI.

The shipments and supply report that you are reading now is based on monthly shipments by product as reported by the AISI plus import and export data from the DOC. Figure 2 shows the monthly shipment data for all rolled steel products. In the long run the trajectories of growth in Figures 1 and 2 are comparable, but the decline in 2019 is less obvious in the monthly data.

First though we will look at the shipment and supply situation for all product groups to see how much difference there is between them. Table 1 is this compilation. Total supply (proxy for market demand) as a three-month moving average (3MMA) was down by 6.1 percent year over year and mill shipments were down by 0.6 percent, meaning that imports took a smaller slice of the pie in the three months through December year over year. There is a big difference between products. Long products continued to perform the best of the major product groups and tubulars the worst. The supply of sheet products was down by 2.7 percent in three months through December year-over-year and domestic mill shipments were up by 1.7 percent.

Now let’s look at sheet products in detail. One consideration is that seasonality of demand is significant with a 10-year historical average that varies by 11.4 percent between the high month of August and the low month of November. Over this 10-year period, April through July have been quite consistent as shown in Figure 3. On average since and including 2010, December has been up by 3.0 percent from November and this year was up by 6.0 percent.

Table 2 describes both apparent supply and mill shipments of sheet products (shipments includes exports) side by side as three-month averages through December with year-over-year growth rates for each. Comparing the year-over-year time periods, total supply of sheet products to the market decreased by 2.7 percent on a 3MMA basis and mill shipments increased by 1.7 percent. Table 2 breaks down the total into product detail and shows that both shipments and supply were up for hot rolled and other metallic coated, which is mainly Galvalume, and down for cold rolled and galvanized products. Apparent supply is defined as domestic mill shipments to domestic locations plus imports. In the three months through December 2019, the average monthly supply of sheet and strip was 4.491 million tons. There is no seasonal manipulation of any of these numbers. By definition, year-over-year comparisons have seasonality removed.

Table 3 shows that the total supply of sheet and strip products in 2019 was down by 4.5 percent compared to 2018. The only product to increase was other metallic coated. In three months through December compared to three months through September, total sheet products were down by 6.5 percent. Comparing three months through December year over year, sheet products were down by 2.7 percent. Table 3 shows the breakdown by individual sheet products.

Figure 4 shows the long-term supply picture for the three major sheet and strip products, HRC, CRC and HDG, since January 2008 as three-month moving averages.

Table 4 breaks total long products down into sectors and shows that only rebar driven by construction had an increase in demand year over year. In September, all the long product constituents except structural shapes had positive growth of both shipments and supply year over year. Figure 5 shows the long-term supply picture for longs on a graphical basis. 

Figure 6 shows the long-term comparison between flat and long products. These are monthly numbers (not 3MMA) and clearly show the trend difference between longs and flat products, which includes plate. Flat rolled peaked in March 2018 and longs peaked in May 2019. The trend of flat rolled has been in a decline since March 2018.

SMU Comment: Weekly data from the AISI shows steel production to be increasing by 1.6 percent year over year in the latest results for the week ending Feb. 8. This positive growth trend began in the week ending Jan. 4, 2020. The main thrust of the report you are reading now is monthly data ending in December 2019.

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