Shipments and Supply of Sheet Products through December 2014

Comparing these two periods total supply to the market was up by 12.3 percent as mill shipments were up by only 2.4 percent. In other words, imports took the majority of the market expansion. This situation was particularly acute for cold rolled where supply up by 5.7 percent but mill shipments were down by 9.4 percent. January licenses showed that imports declined strongly in that month but even so were still up by 45.4 percent year over year. For hot rolled, supply was up by 18.9 percent as shipments increased by 9.6 percent. At first glance the numbers for electro-galvanized look strange with supply being less than shipments. This is because EG still has a positive trade balance where exports exceed imports. Both supply and shipments of EG are down significantly from the same period a year ago. There was zero increase in supply for other metallic coated products, (mainly Galvalume) as domestic mill shipments fell by 8.8 percent. Now let’s review supply and shipments separately for individual sheet products.

Apparent Supply is a proxy for market demand and is defined as domestic mill shipments to domestic locations plus imports. In Q4 2014 average monthly shipments of sheet and strip were 4,972,841 tons and for 2014 as a whole supply was 58,455,760 tons. Comparing 2014 with 2013 supply was up by 10.8 percent. Table 2 shows the change in supply by product YTD, it compares Q4 2014 with Q3 2014 and with Q4 2013.

In Q4 the supply of all sheet and strip products fell by 1.0 percent compared to Q3 and advanced by 12.3 percent compared to Q4 last year. Comparing Q4 with Q3 all the products listed had a contraction in supply except hot rolled. Compared to Q4 last year all products except EG expanded. Year over year in Q4 hot band grew by 18.9 percent, cold rolled by 5.7 percent and HGD by 12.5 percent. There was a market slowdown in Q4/Q3

Figure 1 shows the long term supply picture for the three major sheet and strip products, HR, CR and HDG since January 2006. All three products are in higher demand than at any time since the recession. Hot band was range bound for 2.5 years until April 2014 when it broke out and advanced through October followed by a small decline in November and December. Cold rolled supply fell below a million tons at 974,560 tons in December (3MMA) after being above that threshold for six of the previous seven months. Prior to this recent past the last time cold rolled exceeded a million tons was in October 2008 as we prepared to go over the cliff. The increase in supply of cold rolled has not been as strong as hot band or HDG. Hot dipped galvanized had a strong bump in H1 2012, declined in H2 2012 and steadily improved for 22 months with a small decline in November and December. In three months through December the supply of HDG averaged 1,480,189 tons per month.

Figure 2 shows import market share of all steel products including semi-finished. There have been only three periods since 2003 when the domestic mills have commanded less than 70 percent of the market and of those three periods the current one is the most sustained.

Mill Shipments: Table 3 shows that total shipments of sheet and strip products including hot rolled, cold rolled and all coated products were up by 2.4 percent YTD through December compared to the same period last year.

In the three months through December, (Q4) compared to three months through September, (Q3), the total tonnage of sheet and strip shipments was down by 2.7 percent but were up by 2.4 percent year over year. Comparing 12 month shipments for 2014 and 2013 for individual products, hot rolled and HDG were the only products to enjoy a shipment increase. Hot band was up by 5.3 percent and HDG by 5.1 percent. Cold rolled was down by 3.1 percent, electro-galvanized down by 11.5 percent and other metallic coated, (mainly Galvalume) down by 12.7 percent. Figure 3 shows the shipment situation by product since January 2008. Of the three major product groups in 2014, hot band performed best and cold rolled the worst.