U.S., Canadian Steel Inventories Rise Slightly in December; Signs Suggest Inventory Liquidation at an End

January 17, 2008

U.S., Canadian Steel Inventories Rise Slightly in December; Signs Suggest Inventory Liquidation at an End

ROLLING MEADOWS, Illinois, January 17, 2008 – Steel inventories at metals service centers in the United States and Canada closed 2007 up slightly from November levels as year-over-year shipments in both countries fell 4.1% from those of December 2006, the Metals Activity Report from the Metals Service Center Institute shows.

U.S. steel inventories at the end of the year were up 1%, to 12.26 million tons, from November’s month-end supply. Canadian inventories rose 1.6% from November’s total to 1.15 million tons. Aluminum shipments in both countries fell from year-ago levels, while total inventories rose slightly from those reported in November.

Although shipments were below year-ago levels again in December, it appears that the liquidation phase of the inventory cycle may have come to end. Service center inventories of steel and aluminum in the United States and Canada all increased in December. For the U.S. steel segment, this is the first increase since the October 2006 inventory peak of 16.8 million tons.

Steel Product Activity

December shipments of steel products from U.S. metals service centers totaled 3.34 million tons, down 4.1%. For the full year, U.S. 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, steel product shipments from metals service centers were 226,200 tons in December, down 4.1%. 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 and, at current shipping rates, represented a 5.1-month supply.

Aluminum Product Activity

December shipments of aluminum products from U.S. metals service centers totaled 75,100 tons, or 13.4% less than December 2006 shipments. Full-year 2007 shipments fell 5.8%, to 1.15 million tons. U.S. year-end aluminum inventories of 274,700 tons were down 27.1% from inventories at the end of 2006 and at current shipping rates, represented a 3.7-month supply.

Canadian aluminum shipments fell 13.9% in December to 7,300 tons. Full-year 2007 aluminum shipments of 119,800 tons were down 3.9% from 2006 shipments. Inventories of 28,400 tons were down 3.4% from December 2006 and, at current shipping rates, represented a 3.9-month supply.

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.

Founded in 1909, the Metals Service Center Institute has more than 420 members operating from about 1,200 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.

Contacts:

Chris Marti, vice president, research (847) 485-3009, cmarti@msci.org

Steve Weiner (847) 485-3011, sweiner@msci.org