Steel inventories at metals service centers in the U.S. and Canada rose in December by 1.24% to 12.67 million net tons from November's month-end supply. This is the first increase since the October 2006 inventory peak of 18.17 million tons. Although the Metals Activity Report from the Metals Service Center Institute suggests that the liquidation phase of the inventory cycle may have come to an end, the pickup in stocks was a "normal seasonal uptick," according to independent market analyst Michelle Applebaum.

The principal analyst at Chicago-based Michelle Applebaum Research writes to clients that "the reality is that December tons in inventory held by the service center sector generally do rise; in fact, December inventories have increased in 15 out of the past 20 years." In her outlook, Applebaum says she doesn't forecast major inventory building in the next six months and believes that distributors will remain cautious. Reason: "Any move towards inventory building would likely cause steel prices in the U.S. to hit new all-time highs as available supply is quite limited."

Shipments of processed steel mill products by metal service centers in the U.S. and Canada dropped 4.1% in December 2007 from deliveries in December 2006. For the full year, regional steel shipments were 55.88 million tons, 6.7% 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 of 3.97 million tons. The year-end inventory of 1.15 million tons was 8.6% lower than 1.26 million ton of inventories at the end of 2006 and, at current shipping rates, represented a 5.1-month supply.

MSCI data shows that 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 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.