Service Center Intake, Shipments and Inventory January 2014

Looking at relatively short term data, such as described above, does not give the full picture. In 2006 and 2007, the good old days, the mills and service centers were operating at maximum capacity. Figure 1 takes the shipments by product since that time frame and indexes them to the average for 2006 and 2007 in order to measure the extent to which each product’s shipments from service centers has recovered. It can be seen that sheet and plate have fared best but are still little better than 80 percent of the pre-recessionary level. Structurals are still only at 58 percent of where they were. The total of all carbon products is still only at 74.7 percent of the 2006/2007 average therefore is down by 25.3 percent. The recovery of the service center sector has been much slower than has been experienced by the mills. Based on product shipment data from AISI, the average monthly carbon steel shipments from the mills in 2006 and 2007 was 8,612,596 tons. In Q4 2013 the average monthly mill shipments was 7,553,668 tons, a decline of 12.3 percent from 2006 /2007. Therefore, it appears that service centers shipments are off by almost exactly twice the deficit being experienced by the mills. Presumably this is because in a relatively lack luster market, more buyers are by-passing service centers and buying mill direct.

Sheet products in this analysis are what the MSCI calls carbon flat. To avoid confusion with plate we are substituting the word sheet for flat. By our interpretation of the MSCI’s data our definition of sheet is all hot rolled, cold rolled and coated products. Figure 2 shows the history of sheet product shipments and the year over year growth rate since the year 2000. Positive year over year growth has occurred in each of the last seven months following nine consecutive months of decline.