Sheet Demand Expands Through September

This report summarizes total steel supply by product from 2003 through September 2017 and year-on-year changes. It then compares domestic mill shipments with total supply to the market. It quantifies market direction by product and enables a side-by-side comparison of the degree to which imports have absorbed demand.

Table 1 describes both apparent supply and mill shipments of sheet products (shipments includes exports) side by side as three-month averages through September with year-over-year growth rates for each. Comparing the year-over-year time periods, total supply to the market increased by 1.1 percent and mill shipments were up by 2.1 percent. The fact that mill shipments were up by more than supply means that imports were less of a factor in the market compared to the same three months last year. Table 1 breaks down the total into product detail and shows that the effect of less import pressure was entirely in hot rolled and other metallic coated products. The reverse was true for cold rolled and galvanized products. 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 September 2017, the average monthly supply of sheet and strip was 4.741 million tons, up by 2.6 percent year to date and up by 1.1 percent in the three months through September year over year. There is no seasonal manipulation of any of these numbers. By definition, year-over-year comparisons have seasonality removed, but 3m/3m comparisons do not. Table 2 shows the change in supply by product on this basis through September.

Figure 1 shows the long-term supply picture for the three major sheet and strip products, HRC, CRC and HDG, since January 2003 as three-month moving averages.

Mill Shipments

Table 3 shows that total shipments of sheet and strip products including hot rolled, cold rolled and all coated products increased by 2.6 percent year to date, and were up by 2.1 percent in the three months through September year over year. The negative growth in three months through September compared to three months through June is largely a seasonal effect as described above. Other metallic coated has had very strong growth year to date. Figure 2 puts the shipment results for the three main products into the long-term context since January 2003.

SMU Comment: A problem with this data is that it’s now well into November and the latest information we have for shipments and supply is for September. AISI puts out weekly data for crude steel production, the latest for which was the week ending Nov. 4. This provides the most current data for steel mill activity. Figure 3 shows the year-over-year change in weekly crude output on a four-week moving average basis.

Growth became positive year-over-year in the week ending Sept. 15 and has been greater than 5.0 percent every week since July 29. Imports of sheet products surged to over a million tons in June and July, but fell back to 904,000 tons in September. Licensed volume in October continued to decline and fell to 883,000 tons. Based on the strength of the economic indicators analysis that SMU performs and our proprietary measure of buyer sentiment, we are expecting demand for sheet products to continue to increase through the balance of the year.