SMU Data and Models
SMU Survey: Clear Signs of Improving Demand
Written by John Packard
April 20, 2014
Steel Market Update (SMU) conducted our mid-April steel market survey this past week. Early in the survey process we approached a subject that we know is near and dear to those within the steel industry – where do our respondents see demand for their products.
What we found is a clear sign of improving demand. We first polled the group which consisted mainly of manufacturing companies (44 percent) and service centers (43 percent) with a smattering of steel mills (5 percent), trading companies (4 percent), toll processors (3 percent) and other suppliers to the industry (1 percent). What we discovered was a vast improvement in the percentage of our respondents who reported demand as “improving” and a clear reduction in those reporting demand as “declining.”
Premium members can review slide #11 in our survey Power Point presentation to see a longer historical view to the responses to this question. The 47 percent is the most optimistic we have seen since we began conducting our surveys in 2008.
As the survey continued, we broke our respondents into their respective groups in order to drill down and get more details regarding demand and other issues of importance to the steel industry.
We asked manufacturing companies to comment on demand on their products over the next three months and we found a majority of the respondents (61 percent) reporting demand as either increasing marginally (51 percent) or substantially (10 percent). For the past three months the trend toward reporting demand as growing has been increasing.
Our market analysis also caught signs of manufacturing companies increasing inventories for the first time in quite some time. Service centers reported they were maintaining inventories (82 percent) with the percentage reporting their company as reducing inventories falling from 29 percent in early March, down to 11 percent this past week.
We also saw an improvement in the percentage of service centers reporting their manufacturing customers as increasing their orders. As you can see by the graphic below, at the beginning of March only 13 percent of distributors were reporting their manufacturing customers as increasing orders. This has since improved to 25 percent.
Rising demand is a good sign for the steel industry and will help to keep the market tight, even as the domestic mills begin to bring back capacity due to iron ore and other production related issues.
John Packard
Read more from John PackardLatest in SMU Data and Models
SMU Survey: Sheet and plate lead times flatten out
Sheet and plate lead times held steady this week, according to buyers responding to the latest SMU market survey. This week we saw little change from mid-April levels, with just one product (Galvalume) showing any significant movement.
SMU Survey: More mills willing to deal on sheet prices, less so on plate
Nearly two thirds of the steel buyers who responded to this week’s SMU survey say domestic mills are negotiable on spot prices. This increasing flexibility marks a significant shift from the firmer stance mills held in recent months.
SMU Survey: Sheet lead times ease further, plate hits one-year high
Steel buyers responding to this week’s SMU market survey report a continued softening in sheet lead times. Meanwhile, plate lead times have moderately extended and are at a one-year high.
SMU Survey: Buyers report more price flexibility from mills
Nearly half of the steel buyers responding to this week’s SMU market survey say domestic mills are showing increased willingness to negotiate pricing on new spot orders. This marks a significant shift from the firmer stance mills held in prior weeks.
SMU Survey: Buyers’ Sentiment Indices fall
Current Sentiment Index dropped six points to +42 this week compared to two weeks earlier. It has fallen in every successive survey since reaching a 2025 high of +66 on Feb. 19.