CHICAGO April steel
shipments by service centers dipped to their lowest level in
four months, helping spur a 2.5-percent rise in inventories
from the previous month even as demand continues to hold steady
despite some erratic moves in spot pricing, market participants
"Inventories did increase,"
Metals USA Holdings Inc. chairman and chief executive officer
Lourenco Goncalves said Tuesday. "But this is not a number to
scare anyone. History will show numbers that are way above 10
million tons with very healthy dynamics in the
The Metals Service Center
Institute (MSCI) reported that steel inventories topped 10.8
million tons at U.S. and Canadian service centers in April, up
from less than 10.6 million tons in March, while combined
shipments fell 7 percent to 4.07 million tons from Marchs
4.38 million tons. On a per-day basis, however, shipments fell
2.1 percent in the United States but less than 0.4 percent
among Canadian distributors.
Goncalves does not think
distributors bought too much steel, but said their customers
sat on the sidelines last month. "The biggest motivation to buy
steel in a decent economy is when customers feel that steel
will be more expensive within the next week or 10 days."
Customers are replacing what they consume, but a "higher price
is not part of the equation right now," he claimed.
As a result, mills are
cost-squeezed, and "we are starting to see high-cost players
have trouble. I would not be surprised if the supply side
starts to dry up," Goncalves said.
Two other service center
operators claimed some of their peers did buy extra steel ahead
of anticipated price hikes.
"(Some) people loaded up in the
first quarter and are working their way through that," said an
executive in the Midwest. "Most people still have a lot of
A Midwest flat-rolled processor
suggested stocks were built up, in part, because mills
misquoted delivery dates and steel arrived earlier than
expected. "Some people anticipated price increases would stick
and hedged, but they didnt stick to the extent hoped
for," he added.
The Midwest processor suspects
there is additional, unaccounted-for inventory at the mill
level. As a result, "its hard to judge a stock inventory
order versus a purchase order you have in house.
"It will be interesting to see
how long the (planned) maintenance outages last," the Midwest
processor said. The big question is whether to continue buying
regularly or "to go leaner and wait out the pricing war."