Metal Service Center Inventories Hit Record in September

October 23, 2006 — According to the Metal Service Center Institute, centers' shipments of steel and aluminum products declined in September versus the comparable month's data in 2005. On the other hand, inventories of both metals rose and inventory-to-sales ratios declined over the month.

Canadian service center shipments (steel and aluminum) also declined, though inventories remained stable over the month.

U.S. steel product shipments totaled almost 4.4 million tons in September, a 5.3% decline from shipments in September 2005, and a 1.9% decline on a seasonally adjusted basis. According to MSCI data, this is the first significant year-on-year decline since July 2005. “For the first three quarters of the year,” the Institute states, “steel shipments were 43.6 million tons, an increase of 4.5% and above the previous record setting shipments of 2004.”

Shipments are normally slower during this period, MSCI notes, but U.S. service centers steel inventories at the end of September totaled nearly 16.6 million tons, 4.2% higher than in August and 27.9% higher than at the end of the 2005 third quarter. At current shipping rates, this represents a 3.8-month supply, a 35% rise over from the same point in 2005, and a 20.8% increase from last month. MSCI notes that the record steel-inventory level (in terms of months of supply) is 4.7, reached in December 2002, December 1981, and June 1980.

Aluminum product shipments in September totaled 106,100 tons, a decrease of 1.7% from September 2005, or 2.2% on a seasonally adjusted basis. Aluminum shipments for the first three quarters of the year totaled 936,500 tons, up 3.4%.

Aluminum inventories at the end of September totaled 388,200 tons, a 8.6% increase over September 2005. This represents a 3.7-month supply at current shipping rates, 10.5% more than a year ago and a rise o 1.2% from August.

Canadian service centers shipped 323,800 tons in September, a decline of 13.5% over August. For the first ine months of 2006, shipments total nearly 3.1 million tons but are down 2.7% over 2005.

Canadian steel inventories of about 1.5 million tons at the end of September were 42.7% higher than in September 2005, and 0.7% higher than at the end of August. At current shipping rate, this represents a 4.5-month supply, an increase of 64.9% from 2005 and 4.6% higher than in August.

As for aluminum, Canadian service centers shipped 9,900 tons during September, down 9.8% from 2005. For 2005 to date, shipments of 93,600 tons were 1.6% higher than during the 2005 period. Aluminum inventories totaled 31,000 tons at the end of September, 9.1% lower than September 2005 and 0.7% lower than in August 2006. At current shipping rate, this represents a 3.1-month supply of aluminum, 0.8% above 2005 and 2.6% below August 2006.