| November 2006 Association News |
Service Center Inventories Cause for Concern? Service center steel inventories at the end of September totaled nearly 16.6 million tons, or 27.9 percent more than at the end of third-quarter 2005, and 4.2 percent above the August inventory total. At current shipping rates, this represents a 3.8-month supply, up 35 percent from the same time last year and 20.8 percent from last month. Shipments of steel and aluminum products from Canadian service centers also declined during September, but inventory positions there were stable, MSCI reports. While inventory-to-sales ratios at U.S. service centers deteriorated in both metal categories in September—to 3.8 months for steel and 3.7 months for aluminum—these ratios are still well below their typical cyclical peaks of roughly 4.5 and 4.3 months of supply on hand, respectively. Though the current level of supply on hand is building, shipments are normally slower at this time of year for steel. Seasonally adjusted, steel is at 3.6 months of supply, up modestly from 3.4 months in August. For comparison, MSCI notes, the record steel inventory level for service centers was 4.7 months of supply, reached only three times—in December 2002, December 1981 and June 1980. U.S. service center steel shipments totaled nearly 4.4 million tons in September, a decline of 5.3 percent from shipments in September 2005, and a dip of 1.9 percent on a seasonally adjusted basis. This is the first significant year-over-year decline since July 2005. For the first three quarters of the year, service center steel shipments totaled 43.6 million tons, an increase of 4.5 percent, topping the record-setting shipments of 2004. Aluminum product shipments totaled 106,100 tons during September, down 1.7 percent from the year-ago month, or 2.2 percent on a seasonally adjusted basis. Aluminum shipments for the first three quarters of the year totaled 936,500 tons, up 3.4 percent. Aluminum inventories at the end of September totaled 388,200 tons, an increase of 8.6 percent from September 2005. At the current shipping rate, this represents a 3.7-month supply, 10.5 percent more than a year ago and up 1.2 percent from August. In Canada, steel shipments from service centers declined 13.5 percent in September to 323,800 tons. For the first three quarters of the year, shipments of nearly 3.1 million tons were down 2.7 percent from the 2005 period. Steel inventories of about 1.5 million tons at the end of September were 42.7 percent higher than September 2005 but just 0.7 percent higher than at the end of August. At the current shipping rate, this represents a 4.5-month supply, an increase of 64.9 percent from a year ago and 4.6 percent higher than last month. Canadian service centers shipped 9,900 tons of aluminum during September, down 9.8 percent from a year earlier. For the year to date, shipments of 93,600 tons were 1.6 percent higher than during the 2005 period. Aluminum inventories of 31,000 tons at the end of September were 9.1 percent lower than September 2005 and down 0.7 percent from August 2006. At the current shipping rate, this represents a 3.1-month supply of aluminum, 0.8 percent above last year and down 2.6 percent from August. AISI Imports declined in September, with net tons down 11.8 percent to 3,699,000 tons. Finished steel imports of 2,922,000 tons were down 9.9 percent from the August numbers. Key products with large increases in September compared to August include reinforcing bars (up 50 percent), structural pipe and tubing (up 47 percent), bars-light shapes (up 29 percent), heavy structural shapes (up 19 percent) and sheets and strips all other metallic (up 11 percent). Looking at a three-month rolling average, finished steel imports overall were up 2 percent from the April-June period. Notable increases were in sheets and strips all other metallic coated (up 33 percent), semifinished steel, used in significant quantities by converters and processors (up 31 percent), steel wire rods (up 19 percent) and line pipe (up 18 percent). Asian exports have shown some of the biggest gains, with Thailand up 86 percent, China up 47 percent and South Korea up 18 percent. The three-month rolling average for Russia is up 33 percent compared to the previous three-month period, and year-to-date imports from Russia are up 135 percent vs. last year. In September, for the third month in a row, China was the single largest source of steel imports to the United States at 519,000 tons. Imports from China were 192 percent higher in September than in the same month in 2005, and at their present pace will exceed 5 million tons this year. “Despite all that America’s steel industry has done to regain lost market share and invest for a strong future, the industry remains vulnerable to injury from countries that have repeatedly sent dumped and subsidized imports to the United States,” says Louis L. Schorsch, CEO of Mittal Steel’s Flat Products Americas and chairman of AISI. “That is why we must have strong and strictly enforced trade laws.” SSINA SSINA reports the following data comparing year-to-date imports and consumption through June vs. the same seven-month period in 2005:
Imports of total specialty steel (comprising stainless steel, alloy tool steel and electrical steel) in the first seven months of 2006 were 566,088 tons, an 8 percent increase compared to the same 2005 period. U.S. consumption was 1,801,725 tons, a 9 percent increase, while import penetration was 31 percent.
CBSA At the end of September, shipments were 7.8 percent ahead of 2005, with copper products up 10.7 percent and alloy product shipments up 5.8 percent. While total shipments for September were off due to fewer shipping days, the average daily shipping rate was still 1.8 percent ahead of September 2005, and 6.9 percent ahead of the prior month. Service center executives report evidence of some product substitution in various product applications due to the high price of copper and brass. This continues to cast a cloud over the industry for service centers, as well as fabricators, CBSA notes. Production in the EU was 15.7 million tons in September, 2.1 percent higher than for the same month last year. Growth is mainly in the 10 countries that joined the European Union in May 2004. The increase in these countries has been led by increased construction activity and auto production, and general growth in the economies of the new member states. Crude steel production in North America was estimated at 10.7 million tons in September, 2.9 percent higher than in September 2005. Total production in the United States was estimated at 8.0 million tons in September, 3.5 percent higher than for the same month last year. Production in the United States has slowed due to high inventories brought about by a surge in imports this year. IISI estimates South American crude steel production at 4.0 million tons in September, an increase of 8.9 percent year-on-year driven by buoyant local economic conditions. China remains the largest steel producing country in the world with total crude steel production of 36.2 million tons in September. This is an increase of 18.5 percent year-over-year. Production in Japan was 9.6 million tons, an increase of 4.8 percent compared to September last year. Growth in Japan is being driven by strong domestic demand. |
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