Seasonally adjusted US steel distributor shipments declined for the 14th straight month in Dec 2019 according to data from the Metals Service Center Institute (MSCI).
Shipments during the month decreased by 7.6pc compared to Dec 2018, while steel inventories rose 7.9pc.
Seasonally adjusted volume declined across all steel products, with flat rolled decreasing 3.7pc from Dec 2018, plate down 22.4pc, bar declining by 19.9pc, structural down by 6.5pc, pipe & tube decreasing by 8.8pc, and stainless declining by 14.7pc.
Steel products decreased to 144,900nt (131,500mt) per day on 21 shipping days in December compared to 159,400nt on 19 days in November according to the MSCI data.
Inventories adjusted upward by 7.9pc in December compared with Nov 2019, following 11 months of destocking, starting Jan 2019. Steel products restocking increased by 10.9pc for flat rolled, 5.8pc for plate, 0.4pc for bar, 0.6pc for structural, 1.9pc for pipe & tube, and 4.5pc for stainless.
December’s seasonally adjusted months-on-hand inventory increased to 2.3 months from 2.1 in Nov 2019 and remains somewhat below the historical average of 2.4months since 2009. Flat rolled months-on-hand inventory was at 2.1 months up from 1.9 over the comparable period and below the historical average of 2.3.
Destocking is the bright spot in December’s MSCI data that reflects that healthy demand and improved steel prices will be needed to uphold recovery.
Inventories are expected to remain steady to slightly higher as steel prices rise and demand improves seasonally in Q1 2020. Year-over-year volume difficulties will likely continue for steel distributors, but margins should profit from increasing steel prices. Through 2020 the industry should begin to see improved comparative sales, specifically in distribution where volumes are projected to improve.