SMU Data and Models

SMU Market Trends Survey: Bearish Signs

October 10, 2017

Responses to several subjects in last week’s Steel Market Update flat rolled steel market trends questionnaire shared a common thread. Comments on demand, pricing, purchases of foreign steel and inventory levels all tended to reflect a bearish attitude among many flat rolled and steel plate service center executives.

· On the subject of steel demand, 34 percent of service center respondents reported that their manufacturing customers are reducing orders. The majority, 53 percent, said OEMs are maintaining their order flows. Only 13 percent have seen an increase in orders from manufacturers.

· On the subject of steel prices, 40 percent of service centers admitted they are lowering spot prices to customers, compared with two weeks prior. Fifty-eight percent said they are keeping prices the same. Almost none are raising prices for spot customers. “We’re trying to toe the line, but we are seeing a little erosion,” said one service center executive. “It’s a mixed bag,” added another. “We’re seeing a lot of quoting activity, but no one appears willing to make decisions right now. Some of the customers requesting quotes are already long on inventory. It’s tough to tell who’s really buying.”

· On the subject of purchasing, 55 percent of respondents said they are buying the same amount of flat rolled steel they bought at this time last year, but another 30 percent are buying less. Only 15 percent say they are buying more. Two out of three respondents buy foreign steel, but less than 30 percent of them were entering new foreign orders as of last week as few felt the gap between foreign and domestic pricing was wide enough to justify the risk.

· On the subject of inventory levels, about 45 percent of service center respondents are reducing their flat roll inventories, while 49 percent are maintaining them as they are. Only a small percentage are building their stock levels under current market conditions. “We have bought some extra as we believe October will be the low point in the market. Prices should start to rise in November,” commented one of the few who is stocking up.

Steel Market Update produces a wealth of information through our twice-monthly surveys. We invite 650 individuals associated with the flat rolled and steel plate industries to respond to our questionnaire. These include manufacturing companies, service centers, wholesalers, toll processors, trading companies and steel mills. Their responses to most of the questions asked are put into a PowerPoint presentation (click here for an example), which is available to our Premium level subscribers. If you would like more information about how to upgrade to a Premium level subscription, please contact us at: info@SteelMarketUpdate.com.