Results of the November Short Track Survey

The Sassda Short Track survey had 78 respondents in November. This survey uses the same questions as those used in the monthly International Stainless Steel Forum’s (ISSF) Short Track Report. The results of the ISSF survey have not been released for the last few months but are once again available. The ISSF survey is only of stainless steel primary producers and thus the results are not directly comparable, but are used to give context.

For Sassda respondents, the results of the first question were:

51% of Sassda respondents had a positive response to the current order situation which continues the improvement seen since the lows in July and is also higher than the same month last year (43%). This 51% positive response is at the highest level since the survey began.

For ISSF Flat Products, the results were:

78% of ISSF respondents had a positive response to orders levels, which is much better than last year August (50%). The weighted average is also higher than the same month last year (2.78 vs 2.59).

For ISSF Long Products, the results were:

For ISSF long product producers, the positive response to the order situation has remained the same as the previous two months (78%) but was up on a year ago (63%). The weighted average (2.83) was slightly lower than the previous month (2.90) but higher than a year ago (2.78).

For sassda respondents, the results of the second question were:

44% of sassda respondents thought the current business situation was positive, which is significantly up on last month (35%) and up on a year ago (37%). This positive response is at the highest level since the survey began. The weighted average has improved again to 2.43 this month compared to 2.29 last month and is higher than last year November (2.29) and is also at the highest level since the survey began.

For ISSF Flat Products, the results were:

The percent of respondents who felt that the current business situation was sufficient or good stood at 61% in August, which was exactly the same as the previous month. This is better than the same month a year ago (48%).

For ISSF Long Products, the results were:

August had a 50% positive response which was down on the previous month (64%). This was a slight improvement on the same month last year (44%). The weighted average of 2.57 was down on last month (2.78) but higher than a year ago (2.38).

For sassda respondents, the results of the third question were:

The outlook was about the same as last month with 19% thinking that things would get better (18% for last month) but 13% expecting things to get worse (10% last month). Expectations are slightly better than the same month last year with a weighted average of 2.60 compared to 2.50.

The above data can be converted to the Sassda Expectations Index, where the index is calculated as 0.5 x % unchanged + % better. Above 50 would predict expansion in the next three months.

For the last five months, the index has been above 50 indicating a continuing expectation of expansion.

For ISSF Flat products. The results were:

4% of respondents felt tings would get better which is slightly lower than the previous month (9%). The weighted average (2.56) is the exact same as August 2016.

For ISSF Long Products, the results were:

21% of ISSF long product respondents felt that business would get better in the next three months, with 0% thinking it would get worse. This shows an improvement in sentiment on the same month last year with the weighted average rising from 2.62 to 2.79 and an improvement from last month (2.71).

The comments received from Sassda members were:

  • 2nd Semester of 2017 was good for us, looking forward to 2018.
  • Christmas coming up….
  • It is becoming increasingly difficult to attract global customers to do business in South Africa – the security threat, the alleged high levels of corruption and the general distress that is found amongst the people (employed and unemployed) are not welcoming signals to those that have money to spend.
  • The import levies are killing the industry. Manufacturers do not get support from government. We are subjected to prices determined by our local mills. Now there is a monopoly and this is impacting on growth and development.
  • The longer term outlook is uncertain.
  • Unfortunately, we can expect a negative outlook going forward. A downgrade from S&P and an expected downgrade after the Budget Speech in February 2018 from Moody’s coupled with a further expected deterioration of the economy. Under tax collections by SARS, due to leadership issues further exacerbates an already negative outlook. All factors point to year 2018 being a very trying year. Prospects for growth next year do not paint a very rosy picture.
  • We have reasonable orders that will take us up to Christmas, but have two other jobs with a lot of stainless steel product that have been postponed until mid-2018. First quarter of 2018 looks pretty bleak.

Overall the improvement seen in the last few months continues and this month’s survey had the highest positive sentiment since the survey began.

There are improvements in the broader economy as well. For example, the seasonally adjusted ABSA Purchasing Managers’ Index (PMI) rose to 48.6 index points in November 2017. This was the fourth consecutive increase and brought the index to the best level since May 2017. However, the PMI remained stuck below the neutral 50-point mark for a sixth straight month, suggesting that the sector still faces headwinds.

From Stats SA, the economy grew by 2.0% in the third quarter. Apart from agriculture, mining and manufacturing were the other major contributors to economic growth. Increased gold and platinum production saw the mining industry grow by 6.6%, while the 4.3% rise in manufacturing was spurred on by increased production of both petroleum and metal products.

Thanks and Kind Regards

Angie Baker
KwaZulu-Natal Regional Manager
Southern Africa Stainless Steel Development Association
Tel: +27 11 883 0119 | Cell: +27 82 604 0040