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Steel volumes dip but see uptick in Dec.

Keywords: Tags  Metals Service Center Institute, steel shipments, steel inventories, steel pricing, steel volumes, MSCI, Corinna Petry

CHICAGO — U.S. distributors’ steel shipments fell 3.5 percent on a per-day basis in November compared with a month earlier, but market players say some of that weakness has abated in December as buyers who reduced inventory too sharply ahead of the holidays were forced to re-enter the market for tons.

Last month, U.S. steel shipments totaled 3.09 million tons, according to Metals Service Center Institute data, a nearly 12-percent decline from October and 6.4 percent lower year on year. On a per-day basis, U.S. shipments totaled 147,200 tons, down from 152,600 tons per day during the previous month.

Canadian shipments totaled 495,100 tons in November, down 5.4 percent from 523,400 tons in October, with per-day steel shipments dropping to 23,600 tons from 23,800 tons in the same comparison.

Meanwhile, U.S. inventories rose to 2.6 months’ supply from 2.4 months’ worth in October, and Canadian stocks rose to 3.4 months’ supply from 3.2 months’ worth previously.

While November proved to be a weaker month for steel service centers in North America, December has so far shown some welcome resilience, sources said.

"Some markets are a little better for demand, like western Canada. And our automotive numbers held up well. Our overall business book is pretty consistent," a multibranch service center operator said. "Our December per-day shipments, until last Friday, were running ahead of November," but the holidays will break that pace.

A lower Great Lakes master distributor agreed that December volumes have been better than expected.

"December shipping rates are pretty good and our backlog into January is fine," he said, citing strength in a number of end use segments. "Automotive is still humming along. We don’t sell direct but we sold automotive-grade steels, filtering from our service center customers to stampers and Tier II and III suppliers."

Some of that renewed December demand might be coming from customers who reduced inventory too fast and are being forced to come back in for material, sources said.

"Some also delayed orders from November and are now spurred to action by announced price increases," a Chicago-area coil processor said.

On the sheet side, mills have announced three rounds of price increases in the fourth quarter: a $40-per-ton hike in October, a $50-per-ton hike in November and a $20- to $30-per-ton increase in December, depending on the mill. Most mills have only captured a portion of the cumulative increases, sources confirmed.

"Of the $120-a-ton total, we’ve probably seen (increases of) $30 to $40 per ton," the multibranch service center operator said, citing hot-rolled pricing in the $640-per-ton range, rather than the $700-per-ton level or more that would have been achieved if all the increases took hold in full.

Other buyers confirmed most mills were still selling below published prices.

A Mississippi Valley distributor, for example, said the published quote on galvanized coil is $750 per ton but he’s getting it for $640. Mills kept rolling substrate in spite of slim orders and are now trying to get rid of it, he said, noting that one mill is shipping his coated coil order in only 13 days.

"Maybe those deals are cooked and no longer available," he said, but "I’m swimming in a big ocean and I’m not the shark," so competitors must have received similar transactions.

Nonetheless, prices could gain some more ground in the new year, buyers said. While many steelmakers’ melting and rolling schedules haven’t yet filled up for January because service centers "don’t want to pay the new price ... they will have to place an order eventually," the Chicago-area coil processor said.

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