December Shipments and Supply of Steel Products Analysis

This analysis is based on steel mill shipment data from the American Iron and Steel Institute (AISI) and import-export data from the US Department of Commerce (DOC). The analysis summarizes total steel supply by product from 2009 through December 2022 and year-on-year (YoY) changes.

The supply/demand differential remains in place, with supply still well ahead of demand. Apparent supply (domestic shipments plus imports) in December was nearly 9% above domestic shipments totals, up 2.9 percentage points MoM.

Export totals fell by 16% over the same period, while imports increased marginally MoM, up 1.5% in December, rebounding after a slight decline the month prior.

Domestic mill utilization averaged 72.7% through December, down 0.6 percentage points from November’s 73.3% and down 9.2% vs. the same year-ago period.

Prices began sliding in May once raw material availability adjusted to the disruptions resulting from the war in Ukraine. The declines accelerated into September and October, falling further throughout November as supply steadily outpaced demand. December pricing recovered slightly to close out the year.

SMU’s benchmark hot-rolled coil price rebounded by roughly $45 per net ton ($2.25 per cwt) in December. It peaked at $1,480 per ton during the week of April 19, 2022, and had been declining since recovering through December. And that has accelerated in the new year. HRC prices closed out in December at an average of $685 per ton FOB mill, east of the Rockies on Dec. 20. Prices were steadily on the rise throughout the month, picking up the pace as mills began to increase their price tags to stop the erosion and build momentum upward.

According to SMU’s latest check of the market on Feb. 21, the price for HRC is $875 per ton on average. Raw steel production, shown below in Figure 1, is based on weekly data from the AISI. It is displayed here as four-week moving averages through Dec. 31.

Monthly shipment data for all rolled steel products and exports are noted in Figure 2. Measured as a three-month moving average (3MMA) of the monthly data, the December total was 7.33 million tons, down 1.4% vs. 7.43 million tons in November. Monthly shipments have increased only once monthly YTD for the 3MMA analysis. Shipments declined 14.8% in December vs. the year prior when shipments were 8.61 million tons. The recovery from Covid-related shutdowns two years ago was meaningful. December’s shipments were just 2.1% above the Covid-induced lows of December 2020. And they are 10.8% below the same pre-pandemic period in 2019.

All rolled product exports totaled 7.18 million tons in December, down 1.1% MoM and 19.9% lower vs. the same year-ago period. December’s total is the lowest mark for the year.

Shipment and supply details for all product groups and individual sheet products are noted in Table 1. Domestic supply (shipments and imports) is shown in Table 2. Total supply (a proxy for market demand) as a 3MMA was down YoY in December, and well behind the 31% growth seen the year prior when the market was rebounding from Covid shutdowns.

Apparent supply is defined as domestic mill shipments to domestic locations plus imports. Mill shipments were down nearly 15%, and a far cry from the 19.9% growth seen during the year-ago period in the same 3MMA comparison. The bright spots are tubular goods and plate products.

Total sheet and strip apparent supply is down YTD (Table 2) compared to 2021, and is similarly lower over the past three months. The same can be said for total rolled product apparent supply, which is notably down over the past 12 months on a 3MMA basis, and down over the same year-ago period. Note that YoY comparisons have seasonality removed.

The supply picture for HRC, CRC, and HDG since January 2009 as three-month moving averages vs. the long-term comparison between flat and long products is shown side by side in Figure 3. On the left chart, all three sheet products are displayed. They had experienced some improvement since mid-2020 but have now been trending downward through December. When compared to the same pre-pandemic period in 2019, all three are down. Supplies of hot rolled have seen the largest percentage decline (-16.2%), followed by cold rolled (-15.3%), and galvanized (hot dipped and electrolytic: -9.4%), from the same pre-pandemic period in 2019. In the right chart, note that these are monthly numbers (not 3MMAs), which show the trend difference between long and flat products, including plate.

By David Schollaert, david@steelmarketupdate.com