SMU Data and Models
Distributors Flat Rolled Deficit to be Eliminated by End of August
Written by John Packard
August 18, 2017
The Steel Market Update (SMU) Service Center Inventories Apparent Excess/Deficit forecast provided last month showed that the deficit in inventories being held by flat rolled distributors would shrink. We have worked with the MSCI carbon flat rolled shipment and inventory data and our model indicates the deficit did indeed shrink and is very close to our forecast.
The MSCI reported carbon flat rolled shipments at 1,991,000 tons. This is 20,000 tons more than our forecast of 1,971,000 tons.
Inventories at the U.S. flat rolled service centers ended the month of July at 4,646,000 tons, which was slightly higher than our forecast of 4,589,000 tons.
Using our model, we show the distributors as having shrunk the inventory deficit from -525,000 tons down to -218,000 tons. The SMU forecast was for the deficit to shrink to -232,000 tons.
August Forecast
Steel Market Update is forecasting flat rolled shipments out of the U.S. service centers to be 2,352,000 tons for the month of August. Our forecast is based on the average monthly change for August over the past four years. In this case, the average change was +2.7 percent.
We are also forecasting that the flat rolled steel distributors will hold 4,862,000 tons of inventory at the end of the month.
If our shipment and inventory forecasts are correct, the service centers will have eliminated their inventory deficit and will be in a “balanced” position with +50,000 tons.
Looking at the months to come using the same formula, we then expect September through January to see a jump in inventories and, in the process, a jump in the amount of excess steel that will be on the distributors’ floors every month through January.
John Packard
Read more from John PackardLatest in SMU Data and Models
SMU Survey: Current Buyers’ Sentiment Index jumps, Future Sentiment slips
SMU’s Current Buyers’ Sentiment Index rocketed up this week, while the Future Buyers’ Sentiment Index edged down. The two indices are almost at parity.
SMU Survey: Mill lead times stretch to 10-month highs
Buyers responding to our latest market survey reported that steel mill lead times were stretching out this week for sheet and plate products tracked by SMU. The results weren’t much of a surprise. Production times have begun moving out following a wave of frenzied buying in response to stricter Section 232 announced by the Trump […]
SMU Survey: Mills slam door on buyers looking to talk price
Mills’ flexibility on price for spot orders has taken a nosedive to levels not seen since the end of March 2023.
SMU Survey: Steel Buyers’ Sentiment indicates increased optimism
After reaching multi-month lows in mid-January, SMU’s Steel Buyers’ Sentiment Indices rebounded this week to some of the highest readings recorded in months.
SMU Survey: Mill lead times fluctuate, extensions expected
While we have seen some movements in recent weeks, steel mill production times remain within a few days of the historical lows observed over the last two years, a trend observed since mid-2024.