Economy

ISM Steel Buyers Expecting Flat Conditions

October 4, 2014

Steel buyers in the September ISM Steel Buyers Survey are expecting general economic activity to be flat over the next six months. Respondents were split at 45.5 percent on whether the the trend for sales and production would go up or remain static.

Tons on hand would cover shipping levels for 0-1 month for 36.4 percent of buyers, 1-2 monts for 54.6 percent and 2-3 months for 9.1 percent. The trend has shifted lower compared to August. Compared to 12 months ago, tons on hand are slightly higher.

Inventory levels match demand for 72.7 percent of those surveyed (up from 58.3 percent in August) with the remainder saying levels are too high. Plans to reduce inventory over the next six months was expressed by 54.5 percent of respondents while 45.5 percent said they will maintain current levels.

Order levels were about right for most efficient operation according to 54.5 percent of buyers, compared to 58.3 percent last month. The percentages of buyers who thought levels were too low or two high increased by about 2 percent.

Buyers are expecting the short term (next three months) to bring in higher levels of orders. The percentage of those expecting the trend to go up increased from 25.0 to 36.4 percent; 54.5 percent expect no change. At present production rates with no new orders, current order books are expected to last 1-2 months by 50 percent of those surveyed, 2-4 months for 20 percent, 4-6 months for 10 percent and more than 6 months for 20 percent. As a comparison, last month’s percentages, in the order given above, were 33.3 percent, 41.7 percent 16.7 percent, and 8.3 percent.

For the last three months no buyer has reported workforce on short time or layoff. Respondents were more optimistic about building or buying new facilities with in the next year–45 percent saying yes and 54.5 percent responding no, up from 25.0 and 75.0 percent, respectively, in August.

Regarding foreign imports, 62.5 percent expect no change in their dependence on off-shore sources, while 37.5 percent (up from 33.3 percent) expect greater reliance. Foreign mill prices were considered below domestic prices by 36.4 percent of those surveyed and not significantly different than US prices by 45.5 percent. Foreign mills are seeking U.S. business at usual levels.