Steel Market Survey Show Reversal in Steel Restocking Trend
Steel Market Update was surprised earlier this week by a number of trend changes we found in our SMU Market Survey. Steel prices continue to rise - albeit at a much slower rate than a couple of weeks ago. But, our SMU Buyers Sentiment meter reading and the trend to restock inventories appear to have reversed course
Steel Market Update (SMU) has posted a number of the graphs from this week’s Market Survey of steel buyers and sellers in the Media Center section of our website. We were surprised with some of the results we found. SMU Steel Buyers Sentiment declined slightly and is now pegged at -29.1% which is 7.5 points lower (more pessimistic) than our results showed from our survey two weeks ago.
The biggest surprise was a reversal of the inventory restocking process which had been ongoing at both the steel service centers and the manufacturing sectors of the steel buying community. Manufacturing companies in our survey two weeks ago were reporting rebuilding inventory by a 2-1 margin over those who reported they were reducing inventory. This week’s survey is showing a slight edge toward reduction (destocking). The graphs are available on line where you can compare this week’s vs. the survey taken in mid January (Media Center tab – click on View Gallery under “Files”).
For service centers this week’s survey is indicating the group as a whole is very active – much more active than they have been for some time as the number of companies reporting they are “maintaining” inventories has declined while those “reducing” inventory has grown dramatically from 8.8% to 26.0% over the past two weeks. The number of companies “building” inventory has remained about the same at 19.5% vs. 20.6% two weeks ago.
Steel Market Update believes there are many factors involved in this change in trend. One key component, in our opinion, is perhaps a reaction to each company’s results for the month of January. One of the graphs posted online indicates a fairly large number of companies (39%) failed to meet their forecast for the month of January. Only 13.6% exceeded forecast. We believe the change in Sentiment and inventory adjustments may be related to the high percentage of companies who were disappointed with their January results.
There are other factors in play as well and we discussed them in today’s Steel Market Update newsletter (February 5, 2010) which can be read online for register trial subscribers or members of SMU.
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