Economy
ISM Steel Buyers Expecting Higher Demand for Products
Written by Sandy Williams
July 8, 2015
Steel buyers in the ISM Steel Buyers Survey continue to be cautiously optimistic that general economic activity will improve over the next six months. In the June survey, 38.5 percent of buyers expect economic conditions to improve, up from 30.8 percent in the May survey. However, 61.5 percent expect unchanged conditions during the period, up from 53.8 percent in the previous survey. No one the latest survey suggested conditions would worsen.
The percentages improve when buyer were asked about the trend of sales and production in the steel industry for the next six months. The percentage of buyers expecting orders and production to be up nearly doubled from 23.1 in May to 53.8 in the June survey. The remaining 46.2 percent expect the trend to remain unchanged.
In the shorter term of 3 months, buyers were also more optimistic on the order trend, rising to 53.8 percent expecting improvement from just 30.8 percent in May. The remainder expected unchanged conditions.
Backlogs are expected to increase said 46.2 percent of buyers, indicating stronger demand.
Inventory levels decreased in June. When asked how many months tons on hand would cover current shipping levels, 30.8 percent said 0-1 month (same as May), 53.8 percent said 1-2 months, and 15.4 percent said 2-3 months. (In May, 30.8 percent reported 1-2 months, 23.1 percent said 2-3 months, and 15.4 percent said 3-4 months.) Tons on hand were perceived to be at similar levels as 12 months ago by 69.2 percent of respondents. The level of inventory was considered “right” by 76.9 percent. Most planned to maintain the levels for the next six months while 23.1 percent indicated reductions ahead.
When asked if their company plans to buy or build new manufacturing facilities in the next year, 46.2 percent said yes and 58.8 percent said no—the exact opposite of May. Hiring is expected to increase.
Dependence on offshore sources for the next six months has been reported as unchanged in the last two surveys. Foreign prices were perceived as below domestic prices by 46.2 percent (up from 30.8 percent in May). Foreign mills are seeking US business at about the same rate as three months ago but survey respondents indicate activity has become more aggressive. Nearly 85 percent of buyers perceived selling prices for their products as competitive.
Sandy Williams
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