SMU Service Center Inventories Index

With 90 percent of the registered flat rolled steel service centers reporting, inventories stood at 2.86 months of supply at the end of October compared to 2.89 months as of the end of September. (Note, as we add service centers, we revise previous months supply as new data becomes available).

Looking at the data a little closer, we found that 50 percent of the responding companies reported their inventories as shrinking compared to the previous month. The changes were mostly subtle (2.90 down to 2.88 months of supply, for example). Of those reporting a decline in the number of months of supply available, only four companies reported a change of 0.50 months of supply or greater. Those that did told SMU the reason was related to mill orders being late or stronger sales in October than anticipated.

Forty percent of the responding companies reported their inventories as rising. Much the same as those who reported a decline, the spread between October and September was very narrow. Only one company reported a change greater than 0.50 months of supply. That company reported all of its inventory as sold, and they have no spot inventory available to sell. Of those reporting growing inventories, some reported receiving a large shipment of foreign or building stock to protect margins on steel that was already sold as the main reasons behind the growth.

Ten percent of the companies reported their number of months of supply as being the same as the prior month.

We did not hear any comments or concerns about service centers having too much or too little inventory.

At the beginning of November, we asked service centers if their inventories were balanced or at a level where they felt they needed to consider buying more inventory. We noticed a small change in the percentage of service centers who reported they were either building inventory now or would be shortly. At the beginning of October, only 6 percent of the respondents reported building or soon to be building inventory. The percentage of service centers reporting a need to build inventory either right now or soon grew to 14 percent as of the beginning of November.