Steel Products Prices North America

Apparent Supply of Sheet and Strip Products through September 2014

Written by Peter Wright

November 12, 2014

Apparent supply, a proxy for market demand is defined as domestic mill shipments to domestic locations plus imports. Sources are the American Iron and Steel Institute and the US Department of Commerce with analysis by SMU. The three month moving average (3MMA) of the total tonnage of sheet and strip supply in the period July through September was 5,022,754 tons, up by 12.1 percent from the same period last year and by 17.1 percent from the same period in 2012.

Table 1 shows the performance by product over three, twelve and twenty four month periods. In three months through September, supply of all sheet and strip products advanced by 2.8 percent compared to three months through June. Cold rolled and electro-galvanized declined in this concurrent three month comparison. Electro-galvanized also declined year over year as all other products expanded. Year over year hot band grew by 10.5 percent, cold rolled by 11.7 percent and HGD by 16.4 percent.

Figure 1 shows the long term supply picture for the three major sheet and strip products, HR, CR and HDG since January 2006. In September on a 3MMA basis hot band continued to break away from the range that has prevailed for over 2.5 years. The 3MMA of hot band supply in September was the highest since September 2006 at 2,247,710 tons. Cold rolled supply at 1,009,914 tons exceeded the million ton level for the fourth time in five months, prior to this recent past the last time this occurred was in October 2008 as we prepared to go over the cliff. HDG had a strong bump in H1 2012, declined in H2 2012 and has been steadily improving for 21 months. HDG in three months through September averaged 1,496,758 tons per month.

Supply is both domestic shipments plus imports. The total supply of all sheet and strip products was up by 12.1 percent in July through September year over year as mentioned above but imports took the lions share. On the same time basis mill shipments were only up by 3.2 percent, (Table 2). Imports of total sheet products on the other hand were up by 53.5 percent in July through September year over year on a 3MMA basis. License data for October indicates that the monthly average import tonnage of sheet products continued to surge.

In summary the supply of sheet products is expanding strongly but the participation of domestic mills continues to be weak.

Peter Wright

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