SMU Excess-Deficit Model Shows Supply-Demand Fairly Balanced

Flat rolled steel inventories ended November in approximate balance with current activity levels, based on the proprietary Steel Market Update Apparent Excess/Deficit model, which SMU applies to MSCI inventory and shipment data. Comparing shipments and inventory on a historical basis allows SMU to forecast if the distribution channel is likely to be over- or under-supplied in a given month, which can affect demand and prices.

U.S. service centers shipped 2,123,000 tons of steel in November, with an inventory of 4,808,000 tons, ending the month with a surplus of +170,000 tons. SMU had forecast shipments of 2,097,000 tons, inventory of 4,700,000 tons, and a surplus of 126,000 tons, using the SMU model. While the actual figures were slightly higher than SMU’s forecast, the shift from a slight deficit to a small excess supply was accurate.