SMU's Mill Order Index down slightly in April

The trend arrives amid the on-order pipeline seeing delays from extending lead times. Mill new order entries in April were down nearly 3% vs. March as a result. And this comes even as service centers try to backfill and even pad inventories. The dynamic remains complicated as the market continues to experience a supply-side squeeze.

Still, April intake was up 2% month on month (m/m), while shipments lagged by 1.7% vs. March.

Service centers’ daily shipping rates—up 3% from March—were also up more than 5% vs. year-ago levels, despite fewer shipping days. Average shipping days last month were 21, down from 22 in March.

Key highlights

Recent efforts to maintain leaner inventories have shifted slightly as steel availability is squeezed. This is reflected in a jump in the percentage of inventory on order, which rose more than 10% m/m, nearly matching present inventory levels.

While service centers try to balance inventory with demand, it has become more challenging, as mill contracts are generally being held to minimums, and spot tons are not readily available.

A boost in inner-buying or double-buying has been reported. And service centers relying heavily on contract tons are seeing supply lag shipments. When comparing year-ago levels, inventories are down more than 4.7%, while shipments are down 1.7%

The MOI now stands at 106.7, down 2.8% from 109.7 in March. The rate was just slightly below the average year-to-date reading of 107.5, but was up more than 26% y/y. Results suggest inventories might be uncomfortably lean as service centers try to rebalance stock as available units are squeezed.

Methodology

SMU derives its MOI—a relative index that evaluates the latest change in service center mill order entries—from our monthly service center inventory data. This index is a good indicator of current service center buying patterns, displaying perceived demand and lead times. This stands out because lead times typically signal upcoming moves in steel prices.

The MOI uses a base period, presently 2022-24, to establish a reference point for measuring service centers’ mill orders over time. This base period is assigned an index value of 100. Subsequent MOI values are then calculated relative to this base.

An index score above 100 indicates an increase in buying, and a score below 100 indicates a decrease.

Figure 1 shows the nearly six-year history of the index on the left and provides a closer look at the MOI readings of the past two years on the right (100 = 2022-2024 average).

Background

Market conditions in 2025 saw brief price spikes, but overall activity remained mostly steady and at times sluggish. It was held back by weak end‑use demand (as shown in the right‑side chart of Figure 1).

Intake volumes rose through much of Q1 last year as downstream buyers pulled purchases forward in anticipation of tariff‑driven price increases. That surge in service center orders pushed mill prices up quickly, even though underlying demand didn’t improve.

After peaking a year earlier, intake volumes began a gradual decline. Service centers ultimately caught the market low point in October and held their positions through the end of 2025.

The lowdown

Seasonal buying patterns saw intake volumes generally improve in Q1. But gains remain subdued and behind year-ago levels. While downstream customers were tightly managing inventories, prioritizing contract fulfillment, service‑center shipments showed just marginal lift.

While new order entries saw a notable increase in October—reaching a two-year high—they quickly declined by more than 30% in November and have since been relatively stable.

The data would indicate the improvement and subsequent leveling observed in the first three months of 2026 are in line with seasonal patterns. But some unplanned outages and production delays have driven a supply-sized squeeze and led to higher prices.

SMU’s MOI will likely rise in the immediate term and potentially into Q3. The general expectation is that inventories, while tight, could be impacted even more as new order entries rise, and lead times remain extended. Production delays and planned outages for late Q2 will likely keep lead times longer, further impacting the supply pipeline.

SMU’s MOI pairs well with—and for the past five years has preceded—moves in mill lead times (Figure 2), though the latest results would indicate a divergence. And SMU’s lead times have also been a leading indicator of flat-rolled steel prices, particularly for HRC (see left-side chart in Figure 3).

Our MOI also pairs well with our Steel Demand Index (see right-side chart in Figure 3), which, for nearly a decade, has preceded moves in mill lead times. But, again, the latest data denotes a disagreement.

How will things settle?

April inventories are down nearly 17% y/y while shipments are nearly flat (+0.5%). HRC prices have been on the rise, now up $305 per short ton (st) since late September. And lead times have been steadily stretching out, now at 7.0 weeks on average in our latest assessment, up from 6.7 in late April.

The trend points to a downstream supply chain that’s becoming uncomfortably lean. Many still see April inventories somewhat aligned with demand, but extending lead times and this tight setup are contributing to rising prices.

If lead times keep stretching, spot tons will drive prices higher, as availability appears to be less than some believe, and drive competition.

That tension likely explains why the Mill Order Index remains firm, and our Demand Index continues to expand.

We’ll be watching closely for any shifts as we move closer to Q3.