ISM Steel Buyers Showing Cautious Optimism

More inventory was on hand with most buyers (71.4 percent) holding enough to cover shipping levels for 1-2 months. Compared to inventory levels a year ago, tons on hand increased 10-20 percent for 40 percent of those surveyed while 28 percent said inventories were about the same. Fifty percent of respondents in February said inventory levels were too high for demand and 57.1 percent expect to decrease inventory over the next six months—a change from January when 63.6 percent of respondents said inventory was about right and planned to maintain those levels for the next six months.

Current receipts compared to current shipments remained at the same levels from last month but buyers were slightly more optimistic for increases over the next three months. Incoming order levels as compared to efficient operation was slightly below levels in January but more respondents believe orders will pick up in the next three months (57.1 compared to 36.4 last month).

Shipping levels were about the same in February but higher than levels reported a year ago. Selling prices appeared stronger in February with 78.6 percent reporting prices as competitive compared to 54.5 percent in January.

Most buyers reported no short-time or layoffs in February and 28.6 percent, compared to 18.2 percent last month, said new hires were expected. Plans to build or buy new manufacturing facilities within the next year were overwhelmingly negative at 85.7 percent.

Most respondents thought the trend of general economics for the next six months would be unchanged while 35.7 percent expect conditions to improve. Half of those surveyed expected sales and production to pick up in their industry in the next six months while 42.9 percent expected conditions to remain the same. Current book orders would last, at present production rates and with no new orders, 1-2 months for 53.8 percent and 2-4 months for 30.8 percent of respondents.

Foreign prices were judged similar to domestic prices and pursuit of U.S. business by foreign mills was unchanged from January.