CHICAGO — North American steel shipments took a sharp dip in December, and soft sales have continued into January for nearly every sector except automotive, keeping lead times short and quelling any expectation of a price run-up, market participants said.

Steel shipments by U.S. distributors totaled 2.5 million tons in December, down 18.1 percent from November’s totals and off nearly 28 percent compared with October’s volumes, according to data from the Metals Service Center Institute (MSCI). Canadian service centers also logged a significant reduction in volumes, shipping 338,600 tons last month, down 31.6 percent month on month and off some 35.3 percent compared with the first month of the fourth quarter.

Shipments are always weaker at the end of the year. "Customers don’t like to put steel in their shops (in December). Instead, they want it the first shipping day of January," one Mississippi Valley processor said.

But even compared to the same month last year, shipments were off sharply in December, the data show, suggesting more than just typical seasonality was at play. In December, U.S. steel shipments were off 14.4 percent compared with the same month the previous year, while Canadian shipments were down more than 19 percent year on year, according to MSCI data.

And according to a number of steel distributors, that weakness has persisted into January, at least in some sectors.

"Things are pretty slow," said a national distributor. "Within the markets we sell, customers are saying things are OK but slow. We are not getting the big (January) pop we got the last four years."

"We see demand as weak. ... Customers don’t want to buy steel. A lot of October tons are still on customers’ books. But there seems to be a rant, cheerleading the industry into a place that doesn’t exist," agreed a source at a lower Great Lakes service center that stocks the full gamut of sheet products.

A sheet distributor said one of his suppliers noted that the January order book was filled. Traditonally, bookings should be four to six weeks out to be perceived as having some strength.

"It’s Jan. 16! That’s not good. I think it’s a mess," he said, noting that his shipments this month are down from a year ago and "we’re not getting pounded with inquiries. Our backlog is receding as we ship and we’re not replenishing it at the same rate."

But for others, steel demand is a little patchier, with some segments—such as automotive—even showing signs of strength.

"All of our automotive customers are booming," a strip-coil distributor said, adding that January sales and shipments should line up with the same month a year ago. "I’m not behind on bookings."

A southern service center executive agreed January sales have been spotty. "We have a great day and then, holy cow, who cut our phone lines?"

With shipments down, steel distributors’ inventories rose 4.6 percent in the United States and 9.6 percent in Canada month over month in December, data show.

Editor's note: This story was updated Jan. 17, 2012, to fix a quote that was incorrectly attributed to a producer rather than a sheet distributor.