December 18, 2007

With Economic Outlook Uncertain, Steel and Aluminum Inventories Shrink at U.S., Canadian Metals Service Centers

December 18, 2007

With Economic Outlook Uncertain, Steel and Aluminum Inventories Shrink at U.S., Canadian Metals Service Centers

ROLLING MEADOWS, Illinois, December 18, 2007 – The uncertain economic outlook compounded by seasonally low demand led to reduced shipments of steel and aluminum products from metals service centers in the United States and Canada in November. Inventories also continued to decline from year-ago levels as service centers, reluctant to restock, delayed most new orders until seasonal upswings require it, the Metals Activity Report of the Metals Service Center Institute shows.

U.S. service centers further drew down steel inventories and added modestly to aluminum stocks compared with October inventory totals. Although U.S. inventories, as measured by months of supply on hand, appeared to rise from October levels, the change was due to the seasonal demand decline. Canadian service centers added slightly to steel inventories while slightly reducing aluminum inventories from October.

Steel Product Activity

November steel product shipments from U.S. service centers totaled 3.99 million tons, down 7.8% from shipments during the same month in 2006. Shipments for the first 11 months of the year totaled 48.8 million tons, down 7% from a year ago. U.S. inventories at the end of the month totaled 12.1 million tons, 27% lower than November 2006 and the lowest total since November 1997, when inventories totaled 11.8 million tons. At current shipping rates, inventories represented a 3.0-month supply, compared with a 3.8-month supply on hand at the end of the year-ago month and 2.6-month supply at the end of October.

Canadian steel product shipments fell from year-ago totals for the 16th consecutive month, to 321,400 tons, down 0.3% from last year. Year-to-date shipments totaled 3.48 million tons, down 6.8% from last year. Steel inventories were down 12.4% from a year ago to 1.13 million tons, or a 3.5-month supply, compared with a 4.0-month supply a year ago and a 3.3-month supply at the end of October.

Aluminum Product Activity

U.S. service center shipments of aluminum products totaled 89,000 tons in November, or 5.5% lower than November 2006. Year-to-date aluminum shipments were 1.08 million tons, down 5.2% from last year. U.S. aluminum product inventories were 272,200 tons, down 29.9% from a year ago and equal to a 3.1-month supply, compared with a 4.1-month supply at the same time last year and a 2.7-month supply at the end of October.

Canadian service center aluminum shipments of 9,900 tons were down 2.4% from November 2006, and year-to-date shipments of 112,500 tons are 3.1% lower than a year ago. Canadian aluminum inventories of 27,600 tons were down 10.3% from last year and, at current shipping rates, represented a 2.8-month supply, compared with a 3.0-month supply at the end of November 2006.

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.


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

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