Domestic Steel Inventories Rise Slightly in December
01/21/2008 - Steel inventories grew slightly in December, marking the first increase since the inventory peaked in October 2006 and leading some to anticipate that widespread inventory liquidation could be reaching an end.
U.S. steel inventories reached 12.26 million tons by the end of the year, a 1% increase over November’s month-end supply, according to the latest Metals Activity Report from the Metals Service Center Institute (MSCI). Canadian inventories rose 1.6% over the same period, reaching 1.15 million tons by year-end.
For the U.S. steel segment, this was the first increase since the October 2006 inventory peak of 16.8 million tons. And although year-over-year shipments in both countries are 4.1% below those of December 2006, the MSCI report suggests that the liquidation phase of the inventory cycle may have come to end.
In the U.S., December metals service center shipments of steel products totaled 3.34 million tons, down 4.1%. For the full year, steel shipments were 52.18 million tons, 6.8% below 2006 steel shipments. The year-end steel inventory figure was 25.7% lower than inventories at the end of 2006. At current shipping rates, the year-end total inventory was equal to a 3.7-month supply.
In Canada, metals service centers shipped 226,200 tons of steel product in December, a 4.1% decrease. Full-year 2007 steel shipments of 3.7 million tons were down 6.7% from 2006 steel shipments. The year-end inventory was 8.6% lower than inventories at the end of 2006; at current shipping rates, this inventory represented a 5.1-month supply.
Founded in 1909, the Metals Service Center Institute has more than 420 members operating from about 1200 locations in the U.S., Canada, Mexico, and elsewhere in the world. Together, MSCI members constitute the largest single group of metals purchasers in North America, amounting each year to more than 65 million tons of steel, aluminum, and other metals, with about 300,000 manufacturers and fabricators as customers. MSCI’s membership also includes almost all ferrous and non-ferrous industrial metals producers in North America. Metals service centers inventory and distribute metals and provide first-stage fabrication services.
The Metals Activity Report (MAR), based on data from metals service centers in the United States and Canada, is produced by the Metals Service Center Institute and a third-party econometrics and strategy firm, McCoy, Scott & Co. MSCI tracks the relationships between many external economic variables and MAR shipment levels on a regular basis. The statistical validity of these relationships describes the credibility of the MSCI data and the importance of the metals distribution channel to the manufacturing economy as a whole.
