SMU market survey results now available

Key points and takeaways

We go over the big highlights of the survey in the next Final thoughts. Here are some other key points that we think are worth your time. (And, again, our premium subscribers can follow along with the latest results here.)

• Steel Buyers’ Current Sentiment edged back up for a second straight survey but is still just about 14 points above a four-year low (slide 9). Future Sentiment (slide 11) saw a bigger jump, up 17 points vs. the prior market check.
• Lead times for HR coil are still largely stable, though still moving marginally higher. Lead times for tandem products have improved modestly, while plate slipped (slide 13).
• On pricing, buyers said that most mills remain willing to negotiate. But there was still a steady decline in the number willing to cut deals after both Nucor and Cliffs moved HR prices above $700/st (slide 16). We’ll keep tabs on whether negotiation rates continue to slide in the weeks ahead, but they remain between 71-88% depending on product.
• On the raw materials front, about two-thirds of respondents still expect scrap prices to be sideways again in September (slide 19). But fewer (25% currently vs. 31% prior survey) expect prices to move up next month. Another 14% anticipate a decline, up from 6% midway through August.
• What might keep sheet prices from a sharp rally? Some 62% of respondents said they will meet forecast in August, while another 31% said they will miss their business forecast (slide 20). Only ~7% think they will exceed forecasts in August. Also, 80% of service centers said they are releasing less steel (slide 28) than a year ago, up from 67% earlier in the month.
• What might support higher prices? Service centers reported lowering prices – likely a continued reaction to mills trying to move tags up (See slide 38, one of our favorites.) That’s a significant shift from the nearly 20% who were cutting prices just two weeks ago. But it might be too soon to predict any surge in prices. Just about 20% of service centers reported increasing prices.
• Another notable trend, nearly 30% of manufacturers said they are lowering inventories, while only 6% of services say they are building inventories (slide 31.)

There’s a lot more to unpack in the survey. Be sure to check out the next Final thoughts for some of the comments and key reactions directly from our sources.