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Steel shipments jump on strength in autos

Keywords: Tags  Metals Service Center Institute, MSCI, shipments, inventories, Morgan Stanley, St. Lawrence Seaway, Stephen Brooks, Chamber of Marine Commerce automotive

CHICAGO — The summer doldrums may be less dull than usual this year as service center shipments ramp up due to customer restocking and improved demand from the automotive sector.

Service center shipments shot up in June compared with the same month last year in a trend some industry sources interpreted as underpinning a flat-rolled steel market on solid footing.

The stronger year-over-year numbers come as inventories remain lean and customers are looking to restock, especially with prices likely to hold their ground or even tick upward slightly in coming weeks, market sources said.

"I think it’s stabilizing. Certainly we’re not hearing the doom and gloom that people were prophesying in early June," one service center source said.

The service center source dismissed market speculation that price increases could be imminent following a favorable ruling by the U.S. Commerce Department on oil country tubular goods (, July 15). That development alone probably isn’t enough to see mills officially boost prices, although it should see tags firming up—a trend that should attract some buyers who had been on the sidelines waiting for price declines off the fence, he said.

U.S. service centers’ steel shipments totaled 3.69 million tons in June, down 1.7 percent from 3.75 million tons in May but up 10.2 percent from 3.35 million tons in June 2013, the latest Metals Service Center Institute (MSCI) data show. Canadian shipments were pegged at 481,000 tons in June, off 5.6 percent from 509,700 tons in May but 6 percent above 453,700 tons in June a year ago.

Steel inventories held by U.S. centers, meanwhile, increased to 8.54 million tons (2.3 months’ supply at current shipping rates), up 1.4 percent from 8.42 million tons (2.2 months’ supply) the prior month and 7.4 above 7.95 million tons (2.4 months’ supply) in June 2013.

"June service center data remain suggestive of an improving steel market," analysts at Morgan Stanley Research America said in a July 16 note, pointing out that shipments per day declined less vs. the previous month than they normally do in the historically slower summer months.

Individual product data also show "mostly neutral to improving data," the analysts said.

Flat-rolled shipments clocked in at 115,000 tons per day in June, down 1.9 percent compared with May but up 4.9 percent vs. June 2013, Morgan Stanley analysts noted. The same trend held for plate, with 17,100 tons per day shipped last month, down 3 percent from May but up 6 percent from June 2013, they said.

Better June shipment data wasn’t limited to service centers, with strong demand from the U.S. automotive industry driving significantly increased steel shipments through the St. Lawrence Seaway to U.S. ports.

General cargo shipments through the St. Lawrence to ports in Cleveland, Detroit, Milwaukee and northwest Indiana totaled 872,000 tonnes from March 25 to June 30, a 44 percent increase over the same period in 2013, the Chamber of Marine Commerce said July 16. That figure includes steel slabs and coils as well as aluminum.

With car sales up and the Purchasing Manager Index indicating growth for American manufacturers, "expectations are that steel product shipments through the Seaway will continue to be strong," Chamber of Marine Commerce president Stephen Brooks said in a statement.

The chamber represents U.S. and Canadian shippers, ports and terminals.

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