SMU Data and Models

SMU Market Trends: Optimists in the Majority

Written by Tim Triplett

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.

surveyPessimistic 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,

Latest in SMU Data and Models