Shipments and Supply of Sheet Products through January 2017

Apparent supply is a proxy for market demand. Comparing these two time periods total supply to the market was up by 9.4 percent and shipments were up by 8.0 percent. The fact that supply was up by more than shipments means that over a three month time period imports took market share compared to the same three months last year. Table 1 breaks down the total into product detail and it can be seen that supply grew by more than shipments for every product except hot rolled. Electro-galvanized is an odd ball because it has net exports.

A review of supply and shipments separately for individual sheet products is given below.

Apparent Supply

Apparent Supply is defined as domestic mill shipments to domestic locations plus imports. In the three months through January 2017 the average monthly supply of sheet and strip was 4.496 million tons, up by 9.4 percent year over year compared to the same period ending January 2016. In the three months through January compared to the 3 months through October, supply was down by 1.5 percent. The short term decline (3 months) compared to the long term improvement (12 months) means that through January momentum was negative. This was probably a seasonal effect as there is no adjustment in any of these numbers and we know that buyers play the year end inventory game. Table 2 shows the change in supply by product on this basis through January. Momentum was negative for all products except electro-galvanized.

Figure 1 shows the long term supply picture for the three major sheet and strip products, HR, CR and HDG since January 2003 as three month moving averages. All three products had an uptick in supply in January on a 3MMA basis.

Figure 2 shows import market share of sheet products and includes long products for comparison.

Based on a 3MMA, the import market share of sheet products declined from 21.5 percent in December to 20.7 percent in January which was the lowest share since August. Long product import market share is now below its trend since 2010 and in 3 months through January was 23.1 percent.

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 8.0 percent in 3 months through January year over year and down by 1.4 percent comparing three months through January with three months through October.

Momentum for the total shipments of sheet and strip products was negative because the 3 month growth (-1.4 percent) was less than the 12 month result (+ 8.0 percent). However there is no seasonality in the 12 month figure and there is in the 3 month comparison so that is probably most of the explanation. All sheet products except other metallic coated (mainly Galvalume) exhibited that pattern. Figure 3 puts the shipment results for the three main products into the long term context since January 2003. This figure looks like a muted version of Figure 1 because exports have replaced imports.

SMU Comment: A problem with this data is that it’s now well into March and the latest data we have for shipments and supply is for January and a lot has happened since then to the positive. The AISI puts out weekly data for crude steel production the latest for which was w/e March 4th. This provides the most current data for steel mill activity. Figure 4 shows the y/y change in weekly crude output on a four week moving average basis. Growth became positive year/year in w/e November 19th and has been positive for the last 16 weeks.