SMU Data and Models
SMU Flat Rolled Steel Market Analysis View of Demand
Written by John Packard
October 13, 2015
There are two groups of people who get access to a good portion of our flat rolled steel market analysis which is conducted by Steel Market Update twice per month. The two groups are: the people who participate in our research and our Premium level members.
We believe our analysis is superior to others which exist in the marketplace due to the uniqueness of both the questions and the effort put into qualifying those who participate in the research.
We are watching a number of trends besides flat rolled steel pricing. We have an article in tonight’s newsletter about both manufacturing and service center views of distributor spot pricing. We believe this to be an important key in determining if/when steel mills may be able to announce and then collect price increases.
We found some interesting tidbits in our latest analysis which was conducted this past week. One of the most important is regarding demand.
In the graphic below we believe you should be able to clearly see the trend which developed at the beginning of the 2nd Quarter 2015 and has continued through this past week. The trend is an overall weakening of demand being reported by our participants as a group. At 30 percent reporting demand as declining we are at the highest levels measured over the past two years. At the same time the 10 percent reporting improving demand is at the lowest level seen during that same time period.
In each analysis done by SMU we dig deeper and break out details for the two largest steel buying units: service centers and manufacturing companies.
We asked service centers if their manufacturing customers were increasing, reducing or maintaining their orders right now. As you can see by the graphic below the trend for order reduction is moving in full force.
Manufacturers are also asked about order flows only we concentrate on the direction of where they might be 3 months out into the future. Both the service centers and manufacturers are painting a less than stellar picture for the next few months.
But, our Key Market Indicators (also a Premium level product which can be found on our website) and the information shared with us by Alan Beaulieu of the Institute for Trend Research (ITR) at our Steel Summit Conference suggest 2016 will be a better year than 2015.
The question then becomes, when will this pessimistic cycle break and when will we begin to see demand move to the upside?
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.