U.S. service center total carbon steel shipments increased by 5.9% year on year (y/y), in May on a three month moving average (3MMA) basis. An encouraging trend, this was the fifth consecutive monthly shipment increase.

msci-table1Table 1 shows percentage change results for shipments, daily intake and inventory level. In all cases the percentage change references 3MMA year on year (y/y). For shipments and inventory, three columns of data are listed offering 12, 24 and 36 month changes. All products groups except pipe & tube posted year on year increases. Bar & shapes recorded the strongest growth y/y, with 17.0% y/y. May plate shipments were up 6.7%, as sheet deliveries increased by 5.8%. Structurals y/y shipments grew by 5.5%. Pipe & tube posted a decline of 6.2% y/y. Despite the welcome rebound in shipments, (exception: sheet in 2015, +1.3%), remain at lower levels than both two and three years ago.

msci-fig1Figure 1 presents total carbon shipment history as a percent of the June 2006 market peak from 2010 to present. The green dotted lines denote periods of growth. In an encouraging sign, the most recent growth spurt shows the steepest slope, indicating pent-up demand. The overall inventory levels months on hand (MOH), was just 2.09 in May, low by historic standards. This suggests that intake will build to support the stronger shipment trend. In fact, daily intake was up solidly across the board in May with the exception of pipe & tube. For all product groups, intake increased by 8.1% y/y. Bar & shapes intake ramped-up by 16.1% y/y, sheet, + 9.9%, plate +6.8% and structurals +1.5%. Pipe and tube intake plummeted 30.8% y/y in May.

Overall inventory levels fell 5.1% y/y, as pipe & tube fell 20.2% and sheet was off 6.5%. Structural inventory increased by 5.2%, plate by 2.6% and bar & shapes by 1.7%. Bar & shapes MOH was 2.26, -0.2 points m/m, sheet’s MOH was 1.95, -0.09 points m/m, plate’s MOH was 2.50, -0.01 point m/m, pipe & tube MOH was 2.48, -0.08 m/m. Structurals MOH was the highest at 2.92, down 0.08 m/m.

At Gerdau we scrutinize the MSCI release every month searching for clues on the industry’s performance. It’s important to us as a significant supplier of long steel products to our service center customers. It’s equally important to keep our steel consuming consumers informed.