NEW YORK U.S.
and Canadian service centers steel shipments rose in
October, but inventory levels were mixed, Metals Service Center
Institute (MSCI) data show.
While steel shipments
increased in both countries, U.S. service centers reported a
slight rise in inventories but a drop in months on hand while
Canadian service centers saw a drop in both inventories and
months on hand.
The steel market has
seen steady but lackluster demand across most major product
groups recently, and some analysts and market sources expect
inventory levels to remain lean moving forward.
"We continue to expect
a less-than-normal year-end destock, given firm/increasing
flat-rolled pricing trends of late and relatively low
flat-rolled months on hand," Luke Folta, an analyst at New-York
based Jefferies LLC, said in a research note. "There are
several mixed end markets currently, but overall more positive
than negative demand, and we continue to look for signs of
improvement (in) the nonresidential cycle as well as improved
trends for areas of heavy equipment."
While "demand is fine
and very steady," there remains a lot of "cautiousness" in the
market, one Midwest flat-rolled service center source said.
Charles Bradford, an
analyst at New York-based Bradford Research Inc., pointed out
that there were more shipping days in October23, vs. 20
in Septemberwhich would lead to higher numbers
"That kind of
mathematics affects inventory levels and supply," Bradford told
AMM. "I do agree that inventories are low, and I
dont know how people are going to react moving forward,
particularly when you enter a period when weather gets bad,
demand falls, but at the same time scrap prices go up and some
people increase their inventories just to protect themselves
from that. I dont think well see a restocking until
the New Year."
Some sources said low
inventory levels, however, have strengthened the flat-rolled
market, particularly in light of recent increases on both the
sheet and plate side, which traditionally would see a softening
at year-end. Others said certain end markets need to pick up
before a material increase in inventory occurs and market
"The lean inventory
situation has provided price support heading into next year,
something we expect to continue," Evan L. Kurtz, an analyst at
Morgan Stanley & Co. LLC, New York, said in a note. "The
structural market remains a weak spot as we wait for
nonresidential construction to pick up meaningfully."
U.S. service centers
shipped 3.79 million tons of steel in October, a 12.2-percent
increase from 3.38 million tons the previous month and 8
percent higher than 3.51 million tons a year earlier, but daily
shipments of 164,900 tons last month were down 2.4 percent from
169,000 tons per day in September, according to the MSCI
Inventories held by
U.S. service centers totaled 8.06 million tons (2.1
months supply at current shipping rates) at the end of
October, up 0.4 percent from 8.03 million tons (2.4
months supply) a month earlier but down 4.6 percent from
8.45 million tons (2.4 months supply) a year ago.
centers steel shipments totaled 531,900 tons in October,
up 12 percent from 474,900 tons the previous month and 1.6
percent ahead of 523,400 tons a year ago, while daily shipments
of 24,200 tons increased 2.1 percent from 23,700 tons per day
of 1.25 million tons (2.3 months supply) at the end of
October were down 4 percent from 1.3 million tons (2.7
months supply) the previous month and 24.6 percent below
1.65 million tons (3.2 months supply) in October last