Shipments of steel showed a deteriorating trend overall from October as total inventories rose 2.6% -- due primarily to a pickup in flat-rolled tonnage of 9.1% offset by a decline in all other carbon steel of 5.1%.

Months' supply remained flat at 2.3 months on hand, as one more shipping day during the month offset a 2% decline in average daily shipments.

The flat-rolled market continues to worry us overall, as that piece of the sector continues to be dominated by less flexible blast furnace companies that took longer to bring capacity on in the spring -- causing a mini-shortage -- and now are taking longer to cut capacity.

The data showed a worrying trend for the carbon flat-rolled market as inventories surged another 9% while news for long products and plate was better as inventories declined by 2%-8%. We believe the increase for flat-rolled is a result of service centers filling holes in their inventories and increased imports in the face of weaker shipments -- down 0.5% sequentially -- due to the end of Cash for Clunkers and the beginning of the seasonally slow fourth quarter.

Bar shipments showed the most resiliency in October, coming in unchanged from September levels, while flat-rolled shipments fell 0.5%, structurals declined 3.9%, pipe and tubing fell 6.8% and plate dropped 7%.

We remain very concerned about the upward trend in imports in recent months, which could boost inventory levels still further for flat-rolled sheet at a time of weakening demand, which could lead to further deterioration in domestic pricing.

Michelle Galanter Applebaum spent mroe than 20 years as a managing director at Salomon Brothers in New York and was the No. 1-rated steel analyst from 1988-2003, according to Institutional Investor magazine. In 2003, Ms. Applebaum formed Steel Market Intelligence, a 5-person Chicago-based equity research boutique providing advisory services to institutional investors. In addition to publishing 10-15 reports/week, Ms. Applebaum sponsors numerous CEO-level meetings for her investor clients during the year. She is regularly quoted on Bloomberg, Dow Jones, The New York Times and makes frequent appearances on CNBC and other news programs. Ms. Applebaum lives near Chicago with her husband, visiting children and 2 dogs.