US steel recovery gaining

The steel recovery is gaining momentum, Iron Age magazine reports. Continued strong demand is bringing another upward revision in estimates of 1980 shipments. Demand is starting to spill over into 1981.

It now looks as though shipments will hit 22 million tons in the fourth quarter and 84 million tons for the year. Both numbers are up 1 million tons from projections made only a few weeks ago. They are up 3 to 4 million tons from the forecasts of two months ago.

Even more significant is the growing belief that the market surge will carry over into 1981. With prices of sheet and tinplate due to go up Jan. 1, it was to be expected there would be a spurt in orders for December. If price buying was a major influence, the spurt would be short-lived and there would be a letdown in January.

It now appears that something more than price buying is at work. The order improvement takes in plates and structurals, which are not included in the January price round. On the products due for January price increases, hedge buying is limited by the ability of the mills to ship.

The market recovery reflects increased orders from auto companies. It also reflects fairly light steel imports. The biggest factor is an inventory swing. After liquidating 3 to 4 million tons of steel inventory in the third quarter, users will come close to stabilizing inventories in the fourth quarter. One explanation given for the abrupt switch is the need to maintain year-end inventories for tax purposes.