Orders Low for Efficient Operations says ISM Steel Buyers

Buyers reported tons on hand covered shipping levels for 2 months or less. Inventory levels were considered Right by 77.8 percent of those surveyed and Too High by 37.2 percent with plans to maintain or decrease inventory accordingly.

Orders were below levels needed for most efficient level of operation for 61.1 percent of participants.  Orders level expectations for the next three months were mixed with 38.9 percent of steel buyers expecting them to go higher, 33.3 percent staying the same, and 27.8 of buyers expecting a drop in orders. Backlogs of orders are expected to decrease according to 27.8 percent of participants, compared to 7.7 percent in June; while 22.2 percent, up from 15.4 percent last month, believe backorders will increase.

Operating levels were reported as below optimal efficiency by 50 percent of those surveyed.

Shipping levels were the same (44.4 percent) or somewhat higher compared to three months ago and above levels compared to 12 months ago.

Selling prices for products were considered competitive by 55.6 percent and weak or very weak by 38.9 percent.

No one reported workers on short time or layoff in July but 61 percent reported they are not hiring new people or planning to do so in the near future. When asked if their company plans to build or buy new manufacturing facilities within the next year, 66.7 answered no.

Steel buyers expected general economic activity for the next six months to remain about the same or move somewhat higher. Sales and production for individual industries for the next six months was expected to remain the same (44 percent) or increase.

Expected reliance on imports for the next six months was relatively unchanged.  Foreign mill prices were considered below domestic prices by 33.3 percent of those surveyed, with the majority reporting no significant differences.  Foreign mills were slightly more active in pursuing U.S. business in July than three months ago.