Economy

Steel Buyers Showing Caution in November

December 3, 2013

Steel buyers are showing a little less confidence that the trend for general economic activity will improve in the next six months according to the ISM Steel Buyers Survey for November. The percentage of buyers who believe activity will remain the same increased from 46.2 percent to 66.7 percent this month with the balance expecting conditions to improve. Likewise caution was seen for sales and production in the next six months, with 60 percent saying activity will stay at current levels, up from 38.5 percent last month.

With no new orders and at the present production rate, the current order book would last 1-2 months for 42.9 percent of buyers, and 2-4 months for 35.7 percent. Those whose order book would last six or more months jumped from 15.4 percent to 21.4 percent.

Current tons on hand would cover shipping levels for 1-2 months for 53.3 percent, up from 38.5 percent in October. Tons on hand are the same or 10 percent higher than a year ago. Inventory was just right for demand said 93.3 percent of those surveyed and 73.3 percent said they will maintain the same inventory levels for the next six months. The rest of those surveyed said they would decrease stocks.

Receipts for the next three months are expected to rise compared to current levels. Incoming orders were still lower than needed for most efficient levels of operation and are expected to remain the same or rise in the next three months. Backlogs are expected to remain the same or increase in the next three months.

Shipping levels moved lower this month but were above levels seen one year ago. Selling prices were seen as competitive by 73.3 percent with 26.7 percent calling them weak, up from 7.7 percent last month. Slightly more than half of buyers expect to hire new people.

More than 93 percent of those surveyed said they had no workers on short time or layoff. Almost unanimously steel buyers said they had no plans to build or buy new manufacturing facilities within the next year.

Of those surveyed, 40 percent said foreign mills are offering prices below domestic levels.