Steel Service Center Shipments Down 42% From a Year Ago
Shipments of steel products from U.S. and Canadian metals service centers fell “at unprecedented rates” in January, according to new data from the Metals Service Center Institute showing that shipments dropped by 42%. January shipments of steel from U.S metals service centers of 2.6 million tons were a 43% decline from the 4.5 million tons shipped during the same month in 2008. Canadian shipments of 406,900 tons of steel were down 38% on a year-over-year basis.
Monthly U.S. service center shipments have been less than 4 million tons since August. Analyst Charles Bradford at Bradford Research Inc. in New York suggests that recovery in service center shipments back to the level of more than 4 million tons “would require an economic recovery that we do not see on the immediate horizon.”
Despite the lower shipments to original equipment manufacturers, metals service centers were able to reduce inventories of metals in terms of months of supply. What that means is that the processing distributors have slowed their purchasing from the mills.
So, month-end inventories of 8.48 million tons of steel were 14.9% below the levels of January 2008 and, at current shipping rates, represent a 3.3-month supply. Canadian steel inventories at the end of the month totaled nearly 1.2 million tons, 35.1% below the January 2008 level and, at current shipping rates, equal to a 2.9-month supply.
Bradford notes that shipments to the service centers are important to the steelmakers. “Since the automakers don't maintain raw material inventories, but service centers normally have about 3 months supply on hand, the swing in inventory levels is critical to the deliveries by the steel mills to the service centers,” he writes to clients. For example, in December 2008 with service center shipments of 2.4 million tons and inventory liquidation of 500,000 tons, mill (and imported) steel deliveries to the service centers were as little as 1.9 million tons or less than 50% of normal.
Monthly U.S. service center shipments have been less than 4 million tons since August. Analyst Charles Bradford at Bradford Research Inc. in New York suggests that recovery in service center shipments back to the level of more than 4 million tons “would require an economic recovery that we do not see on the immediate horizon.”
Despite the lower shipments to original equipment manufacturers, metals service centers were able to reduce inventories of metals in terms of months of supply. What that means is that the processing distributors have slowed their purchasing from the mills.
So, month-end inventories of 8.48 million tons of steel were 14.9% below the levels of January 2008 and, at current shipping rates, represent a 3.3-month supply. Canadian steel inventories at the end of the month totaled nearly 1.2 million tons, 35.1% below the January 2008 level and, at current shipping rates, equal to a 2.9-month supply.
Bradford notes that shipments to the service centers are important to the steelmakers. “Since the automakers don't maintain raw material inventories, but service centers normally have about 3 months supply on hand, the swing in inventory levels is critical to the deliveries by the steel mills to the service centers,” he writes to clients. For example, in December 2008 with service center shipments of 2.4 million tons and inventory liquidation of 500,000 tons, mill (and imported) steel deliveries to the service centers were as little as 1.9 million tons or less than 50% of normal.
By Tom Stundza -- source: www.purchasing.com
