Economy

Steel Buyers Expecting Similar or Improving Economic Conditions

April 8, 2015

Steel buyers in the March 2015 ISM Steel Buyers Survey were a bit more consensus about economic activity in the next six months. In February, respondents were evenly split on whether conditions would go up, remain the same or go down. In the March survey, 46.2 percent expect conditions to remain the same while 30.8 percent expect activity to improve.

When asked about the trend of sales and production in the industry for the next six months, 46.2 percent expect the trend to remain the same as opposed to 41.7 percent last month expecting the trend to go higher. In March 30.8 percent expect an improving trend.

Inventory on hand stretched a bit in March with 15.4 percent with enough inventory on hand to cover 0-1 months, 61.5 percent 1-2 months, 7.7 percent 2-3 months, 7.7 percent 3-4 months and 7.7 percent more than 6 months. (February totals were 25 percent 0-1 month, 61.5 percent 1-2 months, 8.3 percent 2-3 months). Inventory levels compared to demand were considered too high by 46.2 percent of those surveyed while 46.2 percent said levels were right. More than half (53.8 percent) expect to maintain the current levels for the next six months and 38.5 percent plan to decrease.

At present production rates and with no new orders the current order book in March would last 1-2 months for 61.5 percent (up from 8.3 percent in February) and 4-6 months for 23.1 percent. The trend for new orders was expected to remain the same during the next three months by 53.8 percent of buyers, with the remaining split evenly on whether orders will go up or down.

Regarding backlogs, 61.5 percent of respondents expect them to remain the same over the next three months while 23.1 percent expect them to decrease.

Shipping levels were above 3 months ago for 38.5 percent of respondents, and the same for 46.2 percent. Compared to 12 months ago current shipping levels were above for 46.2 percent, the same for 23.1 percent and below for 30.8 percent.

Selling prices were viewed as competitive by 69.2 percent of respondents, up from 58.3 percent in February. Most of the rest viewed prices as weak (7.7 percent) or very weak (15.4 percent).

After two months of no one reporting workers on short time or layoff, 7.7 percent of respondents said they had workforce adjustments. Three fourths of respondents had no plans to build or buy new manufacturing facilities in the next year. New hires were anticipated by 46.2 percent of buyers compared to 41.7 percent in February.

Regarding imports, 63.6 percent expect their dependence on off-shore sources to remain the same while 18.2 percent (up from zero) anticipate less dependence. Foreign prices were viewed as below domestic prices by 46.2 percent of respondents, while another 46.2 percent saw no significant difference. Foreign mills were slightly more aggressive in seeking new business in March.