CHICAGO — Although total U.S. steel shipments in October were on the rise, service centers’ outlook for the balance of the fourth quarter—especially in terms of their confidence in replacing stock—has dimmed.
U.S. steel shipments by companies reporting to the Metals Service Center Institute (MSCI) jumped 14 percent in October vs. September to 3.51 million tons, MSCI data show. As total shipments increased, stocks on hand fell to 2.4 months’ worth of supply from 2.8 months’ worth in September.
But while total shipments were on the rise, the rate of tons shipped per day pared back slightly in October, according to MSCI data, with U.S. distributors shipping 152,600 tons per day last month, down from 162,000 tons per day in the shorter September period.
Canadian shipments logged a similar trend, with total steel shipments rising 11.4 percent month on month to 523,400 tons in October. At the same time, the rate dropped to 23,800 tons per day from 24,700 tons per day in September, while Canadian stocks fell to 3.2 months’ worth from 3.5 months’ worth previously.
The lower inventories may reflect a hesitancy to build stocks before year-end, sources said.
"We have let inventories run down, so we are in a better (financial) position," an executive in the cold-rolled and coated sheet business said.
Customers are pacing themselves month to month, agreed a Midwest distributor. "I am staying extremely cautious on the buy side," he said.
Meanwhile, distributors are still waiting to see whether the most recent $50-per-ton price hikes on flat-rolled steel have legs. That increase, which most buyers agree is still on shaky ground, came on top of a $40-a-ton increase earlier this fall.
"We have seen new pricing but nothing has been enforced," a Midwest coil distributor said Thursday. "We’re not sure what to anticipate for our next move. Even the mills that announced (price hikes) haven’t pushed them."
The first published increase was accepted, he said, "but there were concessions on extras and other terms." On the second increase, it’s too early to tell, he said.
If all of the total $90-per-ton increase takes effect by Jan. 1 in a rising scrap market, the executive in the cold-rolled and coated sheet business said he believes buyers might once more build stocks. "You will see some people make (strategic) buys," he said.
And, at least for one distributor, some of that strategic buying might have already started.
"We are not reducing inventories," reported a Southeastern service center sales executive. "We are building (stock) on items we know are going up. ... It’s a bit of a hedge buy" on long products.