SMU survey: Mill lead times stretch out marginally

Table 1 below summarizes current lead times and recent trends.

Compared to our Sept. 25 market check, the upper and lower limits for some of our lead time ranges this week have changed:

• The longest lead time considered in our hot-rolled range increased from six weeks to seven weeks.
• The shortest lead time in our cold-rolled range decreased from five weeks to four weeks.
• The longest lead time in our galvanized range increased from nine weeks to 10 weeks.

Survey results

Just over half of the companies we surveyed this week believe lead times will be flat two months from now, down from 67% in our prior survey. A third expected production times to extend further (up from 20% in late-Sept.). The small remainder (9%) believe lead times will shrink further (vs. 13% two weeks prior).

We also asked buyers how they classify current mill production times. The majority continue to respond that they are either shorter than normal (47%) or within typical levels (44%). A small portion of buyers said lead times are slightly longer than normal (9%).

Here’s what respondents are saying:

“Domestic lead times have started to slip. We expect that to continue due to poor demand across the board.”

“Normal cyclical curve for the steel market. Mill outages in December will push out lead times.”

“I think once the presidential election is decided, people/businesses will have some direction and business will pick up a bit.”

“In the next 30 days, they go down and then stabilize as buying picks up.”

“I expect a lead time push because of a rebound of steel demand.”

Figure 1 below tracks lead times for each product over the past two years.

3MMA lead times

One way to smooth out the variability seen in our biweekly readings and better highlight trends is to view lead time data on a three-month moving average (3MMA) basis. Through Oct. 9, 3MMA lead times increased ever-so-slightly on sheet products and marginally eased on plate products.

On a 3MMA basis, sheet lead times have begun to flatten out in recent months, while plate lead times continue to shrink. Generally all 3MMA lead times have trended downwards since February and remain at some of the shortest levels seen in the past year.

The hot rolled 3MMA is now at 4.82 weeks, cold rolled at 6.69 weeks, galvanized at 7.04 weeks, Galvalume at 7.13 weeks, and plate at 4.15 weeks.

Figure 2 highlights lead time movements across the past four years.

Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis survey. SMU measures lead times as the time it takes from when an order is placed with the mill to when it is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website. If you’d like to participate in our survey, contact us at info@steelmarketupdate.com.