Steel Inventories Stay Plentiful at Service Centers

By Josh Spoores

October 20, 2011 at 3:11 PM

Changes of inventory levels at steel service centers, the largest customer segment of steel mills, are often the driving force for changes in steel prices. 

The most recent report out of the MSCI (Metal Service Center Institute) notes overall steel inventories at 2.5 months of supply, slightly higher than the average of 2.4 months.  Seasonally adjusted, these inventories have been well supplied for all of 2011 with the last three months at 2.5 months of supply. 

Overall shipments year-to-date are running 16% higher than 2010, while September shipments are 7.4% higher than last September.  Inventories are 12.9% higher than last September.

 Three specific areas to watch in this report are flat rolled, plate, and pipe and tube.

Flat rolled steel in September was a month where service centers received more steel per day than they shipped out. Inventory increased slightly to 50.5 days of supply, the historic average as the apparent excess increased from 200,000 tons to 280,000 tons, representing about 3 days of excess supply. Inventories are well supplied for seasonal strength typically seen in October, though inventories are higher than desired for the slower November and December demand.  

Plate steel in September showed the receipt of steel at the slowest rate since April at 16,800 tons per day, the same rate as outgoing shipments. Inventories remain lower than ideal with the shortage estimated at 63,000 tons. This represents only 3.7 days and could be meaningful if production tightens and lead times move out. 

Pipe and tube noted daily shipments increasing 3.8% to 10,900 tons per day, while the receipt of material increased 7.3% to 11,700 tons.  Net inventory increased by 2.8% as receipt of material arrived faster than shipments were sent out, though days of supply fell to 56.5 days.  Overall, supply remains healthy as it is lower than the ideal level by about 17,000 tons.  

October is traditionally a strong month for steel as demand will tail off into November and December. Recent economic weakness, most notable in confidence than actual data so far, has steel buyers looking to minimize inventory risk into the end of the year. This strategy may work to increase pressure on steel prices, sending them lower until supplies tighten, creating the need for service centers to build inventory and start the next ‘up’ cycle in prices.  

Josh Spoores is the Founder and Chief Analyst of Steel Reality ( as well as VP Sales & Marketing for, a steel news website.  


Tags: Metals Buying Strategic sourcing commodities Metals prices Steel prices
Category: Blog Post

Josh Spoores


Josh Spoores is the founder and Chief Analyst of Steel Reality, a market analysis firm covering flat rolled steel. Prior to founding Steel Reality, Spoores spent six years in a strategy role as Market Research Manager at Majestic Steel USA – one of the largest buyers of flat rolled steel in the U.S. Spoores has spoken at various steel and raw material conferences throughout the country as well as internationally. 

A graduate of Bowling Green State University, Mr. Spoores’ prior experience includes analyst and product management positions at a financial institution and in the local search media industry. 

Steel Reality publishes reports covering weekly market and steel futures data, as well as a report covering the economic data that drives the steel market. 

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