Shipments and Supply of Total Steel Products through February

We start this month’s analysis with year-over-year comparisons of Total Supply, Mill Shipments to Domestic Locations and Imports. Table 1 shows annual summaries by volume since 2007. Table 2 shows the year-over-year changes. In 2018, total supply was up by 2.0 percent, shipments to domestic locations were up by 7.4 percent and imports were down by 13.0 percent.

Figure 1 shows robust growth of U.S. raw steel production through April 13. This is a four-week moving average and is based on weekly data from the AISI.

The shipments and supply report that you are reading now is based on monthly shipments by product as reported by the AISI plus import and export data from the DoC. Figure 2 shows the monthly shipment data for all rolled steel products. The trajectories of growth in Figures 1 and 2 are basically the same.

First, though, we will look at the shipment and supply situation for all product groups to see how much difference there is between them. Table 3 is this compilation. Total supply (proxy for market demand) as a three-month moving average (3MMA) was up by 5.7 percent year over year and mill shipments were up by 5.4 percent, meaning that the import to domestic mill supply ratio in the three months through February year-over-year didn’t change much. However, there is a big difference between products. Sheet products had a year-over-year decline in both shipments and supply. The domestic tubular mills made big gains over imports. The domestic plate producers lost ground to imports. These gyrations are a result of changes in import market share by product, which we describe in a separate report.

Now let’s look at sheet products in detail. One consideration is that demand in February has on a 10-year historical average been down by 5.0 percent from January. This year, February was down by 4.8 percent, therefore very normal. Figure 3 shows the seasonality that has existed since January 2010.

Table 4 describes both apparent supply and mill shipments of sheet products (shipments includes exports) side by side as three-month averages through February with year-over-year growth rates for each. Comparing the year-over-year time periods, total supply to the market decreased by 2.7 percent and mill shipments decreased by 2.3 percent. Table 4 breaks down the total into product detail and shows that both supply and domestic mill shipments were down year-over-year on all sheet products except other metallic coated (mainly Galvalume). Apparent supply is defined as domestic mill shipments to domestic locations plus imports. In the three months through February 2018, the average monthly supply of sheet and strip was 4.486 million tons. There is no seasonal manipulation of any of these numbers. By definition, year-over-year comparisons have seasonality removed. Table 4 shows the change in supply by product on this basis through February.

Figure 4 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.

Table 5 shows that total supply of sheet and strip products including hot rolled, cold rolled and all coated products decreased by 2.7 percent year-to-date and also 2.7 percent on a 3MMA basis year-over-year through February. The decline of 5.6 percent in the three-month period November through February compared to August through October was affected by seasonality.

SMU Comment: It’s now well into April and the latest information we have for shipments and supply is for February. AISI puts out weekly data for crude steel production, the latest of which is shown in Figure 1 for the week ending April 13 on a four-week moving average basis. In the last two months, production has been higher than at any time since mid-2012, but is still not great compared to the pre-recession level.