Foreign Mills Aggressively Seeking US Business Say ISM Steel Buyers

Written by Sandy Williams

The Institute for Supply Management has a sub-group of steel buyers who survey their members once per month in order to track trends affecting the steel industry. In the most recent survey, the ISM Steel Buyers group reported foreign steel mills and their domestic representatives as much more aggressively seeking steel orders from U.S. steel buyers.

As a whole, steel buyers in the May Institute for Supply Management (ISM) Steel Buyers Survey are a little more optimistic about general economic activity for the next six months. Those who expect an increase moved up to 33.3 percent from 27.3 percent in April, however, the majority (66.7 percent) are expecting economic activity to remain essentially unchanged.

Current incoming orders are considered too low by 50 percent of respondents and the same amount say they expect the trend for the next three months to remain unchanged. Sales and production for the next six months are expected to remain the same for 50 percent of respondents but increase for 41.7 percent. Current order books are lean with 58.3 percent reporting orders would last 1-2 months at the present production rate with no new orders.

Selling prices are viewed as competitive by 75 percent of those surveyed.

Tons on hand would cover shipping levels for 1-2 months for 58.3 percent of steel buyers. Compared to 12 months ago, tons on hand are up 10 percent for 41.7 percent of buyers and are unchanged for 33.3 percent. Respondents were evenly split on whether inventory levels compared to demand were too high or just right. Changes to inventory levels correspond accordingly, with 50 percent expecting to decrease inventories and 41.7 percent keeping them the same.

Layoff and short time of workers was not an issue in May and 50 percent expect to hire new personnel. Plans to build or buy new facilities are on hold for 83.3 percent of steel buyers.

Dependence on off-shore steel is expected to rise even higher over the next six months with 57.1 percent saying dependence will be greater, compared to 42.9 in April. After appearing to contract in April, the spread between foreign domestic mill prices increased again in May. Foreign mill prices were perceived as below or well below domestic prices by 58.4 percent of buyers, compared to 36.4 percent the previous month. Foreign mills are more aggressively seeking US business said 41.7 percent of respondents, up from zero in April when 72.7 percent said foreign mill interest was at normal levels.

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