SMU Data and Models
SMU Market Trends: Optimists in the Majority
Written by Tim Triplett
February 1, 2022
Steel buyers remain a surprisingly bullish bunch despite rapidly declining steel prices as well as worries about COVID and the broader economy, .
Steel Market Update’s survey this week asked service center and manufacturing executives if they are optimistic or pessimistic about their prospects in the first half of 2022. About 64% considered themselves optimists versus 36% pessimists. That’s slightly more bearish than the 70:30 split in SMU’s survey two weeks ago, but it still says something positive about the steel market heading into February.
Pessimistic comments, below, generally focus on the uncertainty ahead and the difficulty in managing inventories during the ongoing price correction:
“Pricing dropped too suddenly to correct inventory, but orders have remained high.”
“Regardless of economic strength, we are set to lose tens of thousands selling high-cost inventory at dropping market prices.”
“We’re in a cash crunch due to steel commodity volatility.”
“Everyone has high-priced steel in stock and will need to work through it before buying new. It will take weeks. Mills and service centers can cut prices, but there are few buyers – so prices will fall further.”
“I’m buoyed by customer demand, but of course managing the price downturn despite all the planning is never easy.”
“Uncertainty on the downside is just as bad, if not worse, than uncertainty on the upside.”
“The current commodity bubble was created artificially by the steel cartel. The downside to the bubble is always more difficult than the upside.”
“If you have ANY chance for survival in the steel industry, you have to be a pessimist.”
Optimistic comments, below, tend to focus on the persistently strong demand:
“Underlying demand is still strong.”
“End-use demand remains better than anyone cares to admit.”
“Overall end-user demand should remain strong during the first half of 2022. A recovery in automotive production will not occur during the first half and may strengthen during late Q3 or Q4.”
“I am always optimistic about demand being good. It’s the price adjustments that are not good.”
“As an excess prime buyer, we do well in deflating markets.”
“The market is still strong for our products – tin plate coils.”
“Customers need to place orders and will take whatever savings they can get.”
“I’m not quite sure that what we are seeing is real. I feel as if it might turn the opposite way again, but it’s just a gut feeling.”
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in SMU Data and Models
SMU’s June at a glance
A look at SMU data for the month of June.
SMU Survey: Buyers’ Sentiment rebounds from multi-year low
Both of SMU’s Steel Buyers’ Sentiment Indices edged higher this week. Current Sentiment rebounded from a near five-year low, while Future Sentiment rose to a two-month high
SMU flat-rolled market survey results now available
SMU’s latest steel buyers market survey results are now available on our website to all premium members.
SMU Survey: Sheet lead times pull back after early-June blip, plate holds
Following the uptick seen two weeks ago, lead times eased this week for all four sheet products tracked by SMU, while plate lead times held steady, according to this week’s market survey.
SMU Survey: Pricing power abruptly shifts to steel buyers
The majority of steel buyers responding to our latest market survey say domestic mills are more willing to talk price on sheet and plate products than they were earlier this month. Sheet negotiation rates rebounded across the board compared to early June, while our plate negotiation rate hit a full 100%.