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US steel distributors eye declines ahead

Keywords: Tags  Metals Service Center Institute, MSCI, steel shipments, service cenetrs, steel inventories, government shutdown, corinna petry

CHICAGO — U.S. and Canadian service centers’ steel shipments were mixed in September, rising from a year earlier but falling vs. August, with the market’s course unclear.

Some distributors saw worse results than anticipated for the end of the third quarter.

"September was down by over 20 percent from August for us," a source at one Chicago-area flat-rolled distributor told AMM. "In October, we are seeing a 5- to 10-percent reduction (in shipments) from September."

A New York-area sheet distributor said he hadn’t yet detected a direct impact from the government shutdown but believes demand is trailing off as a result of that, as well as wrangling over the government’s debt ceiling. "I don’t think anyone is in the mood for higher numbers," he said, and that includes pricing. "I don’t think higher pricing is warranted, at least based on demand."

A Mississippi Valley distributor source said he hadn’t bought any steel in more than a week, but he has barge loads of domestic mill stock arriving later than expected.

Two other warehouse operators termed demand a mixed bag.

A coated sheet distributor source said automotive remains positive "but the housing market is hurting." The good news is that some products he buys have returned to normal mill lead times, with no early deliveries.

A lower Great Lakes service center executive said some customers continue to sit on their hands, buying material on a week-to-week basis. "As long as uncertainty persists, they’ll have conservative purchasing practices," he said. "Demand is not lackluster, but there is little growth. People are doing what they need to to get by. Inventories are low and no one is sticking his neck out."

U.S. service centers shipped 3.38 million tons of steel products in September, down 6.9 percent from 3.63 million tons the previous month, although tons shipped per day improved 2.4 percent, according to Metals Service Center Institute (MSCI) data released Oct. 15. Canadian centers’ steel shipments totaled 474,900 tons last month, down 0.8 percent from 478,700 tons in August, but average per-day shipments were 3.9 percent higher in the same comparison.

However, September shipments were up compared with the same month last year, with U.S. centers logging a 9.8-percent gain from 3.01 million tons and Canadian centers registering a 1.1-percent increase from 469,900 tons.

Inventories held by U.S. service centers totaled 8.03 million tons (2.4 months’ supply at current shipping rates) at the end of September, up 1.1 percent from 7.94 million tons (2.2 months’ supply) a month earlier, the MSCI data showed, while Canadian inventories of 1.3 million tons (2.7 months’ supply) were down 6.6 percent from 1.39 million tons (2.9 months’ supply).

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