Economy
May 21, 2014
Service Center Inventory Deficit at 251,000 tons
Written by Brett Linton
Every month, Steel Market Update calculates whether flat rolled steel distributor’s inventories are in excess or a deficit based on our proprietary formula. The Metal Service Center Institute released April data late last week and, based on our analysis, we believe the “apparent deficit” to be 251,000 tons. This represents an improvement of 101,000 tons from the calculated apparent deficit of 352,000 tons noted the previous month (March).
For reference, a figure of zero means distributor inventories are perfectly balanced. We find that when inventories are in deficit – especially large deficits – then spot prices tend to be firm and the domestic steel mills are able to move prices higher (or at least maintain existing price levels). As inventories move into an excess position there is pressure on spot pricing.
