Shipments and Supply of Steel Products Decelerate in April

Although rebounding demand has certainly played a role in pushing steel prices to unimaginable highs, supply limitations have been the primary story. Available data indicates that steel supplies, including domestic production and imports, continue to lag demand and have not quite returned to pre-pandemic levels. Since reaching bottom at $440 per ton in mid-August last year as the economy struggled with the pandemic, prices for HRC hit a new all-time high of $1,720 per ton this week and are yet to show signs of slowing. Since plummeting by 37.3% in the week ending May 16, 2020, raw steel production has moved progressively higher and is now lagging pre-COVID-19 output by just 2.8%. These are four-week moving averages and are based on weekly data from the AISI in Figure 1 below.

Monthly shipment data for all rolled steel products is noted in Figure 2. The trajectories of the rebounds since Q2 2020 are comparable in Figures 1 and 2. Measured as a three-month moving average (3MMA) of the monthly data, April’s total was 8.241 million tons, compared to 8.410 million tons in March, a 2.0% decrease month on month. Shipments were up 39.2% in April compared to the year prior when shipments totaled just 5.919 million tons, underscoring the initial impact and progress of the recovery from COVID-19 disruptions. 

Shipment and supply details for all product groups are noted in Table 1, followed by individual sheet products in Table 2, and domestic supply (shipments and imports) in Table 3. Total supply (proxy for market demand) as a 3MMA was up 4.6% year over year in April, a vast improvement from the 28.1% decline last June when the market was at its lowest. Apparent supply is defined as domestic mill shipments to domestic locations plus imports. Mill shipments improved by 6.6% in April, up from a decline of 7.5% in March in the three-month comparison. Mill shipments in February/March/April were up by 29.1% versus the same period last year. Recovery has varied significantly among various products, with tubular goods lagging most others.

Overall sheet product shipments and supply (Table 2) have improve markedly month on month. Supply increased by 5.8% and shipments by 7.5% in April, a strong recovery from declines of 7.5% and 6.5% in March. In the three months through April 2021, the average monthly supply of sheet and strip was 4.586 million tons, up from 4.481 million tons or 2.3% from the prior month. Total sheet and strip apparent supply is up 0.4% year to date (Table 3) compared to 2020. Note that year-over-year comparisons have seasonality removed. 

The supply picture for HRC, CRC and HDG since August 2008 as three-month moving averages in Figure 3 and Figure 4 show the long-term comparison between flat and long products. All three sheet products have experienced some improvement since mid-2020, but hot-dipped galvanized has seen a 43.1% jump since reaching bottom this past June, and rose 3.3% month on month in April following an increase of 3.1% the month prior. In Figure 4, note that these are monthly numbers (not 3MMAs), and clearly show the trend difference between longs and flat products including plate.

By David Schollaert, David@SteelMarketUpdate.com