Results of the August 2019 Sassda Short Track Survey

The Sassda Short Track survey had 42 respondents in August. This survey uses the same questions as those used in the monthly International Stainless Steel Forum’s (ISSF) Short Track Report. However, 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:

36% of Sassda respondents had a positive response to the current order situation, which is an increase, when compared to July (21%) and worse than a year ago (41%). The weighted average (2.19) is better than July and worse than a year ago (2.22).

For ISSF Flat Products, the results were:

For ISSF flat product producers, 44% of respondents had a positive response to their orders levels, which is lower than a year ago (83%). The weighted average is lower (2.33) compared to July 2018 (3.03).

For ISSF Long Products, the results were:

 

For ISSF long product producers, 44% of respondents had a positive response to their order levels which is lower than last month (50%) and worse than a year ago (83%). The weighted average (2.33) is worse than June (2.50) and lower than a year ago (3.03).

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

33% of Sassda respondents thought the current business situation was positive, which is better than July (15%) and the same as a year ago (33%). The weighted average is higher (2.17) compared to last month (1.86) and is better than August last year which was (2.12).

For ISSF Flat Products, the results were:

The percent of respondents who felt that the current business situation was sufficient or good stood at 47% for July 2019, which is higher than the previous month (40%) and lower than a year ago (52%).

For ISSF Long Products, the results were:

July was lower than June with 25% positive response. This was worse than the same month last year (71%). The weighted average of 2.14 which is worse than the previous month (2.18) and lower than a year ago (2.73).

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

14% of respondents thought things would get better which is better than the previous month (11%). However, 14% thought things would get worse.

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.

 

This month has shown an increase in expectations and the figure is at the neutral 50 points, indicating more optimism in the market.

For ISSF Flat products. The results were:

In July 2019 5% of the respondents felt things would get better with 16% expecting things to get worse. The weighted average (2.31) is lower than July 2018 (2.60).

For ISSF Long Products, the results were:

 

0% of ISSF long product respondents felt that business would get better in the next three months, with 25% thinking it would get worse. The weighted average of 2.15 which is better than last month (1.93) and lower than a year ago (2.41).

The comments received from Sassda members were:

  • The industry is shrinking!! Maybe even sinking along with the rest of the economy;
  • We could do with a lot more work;
  • The Chinese are bringing their stainless in from China. The harbour project has seen over 15 billion spent and 99% of the stainless came from China.  They own two uranium mines and bring in most of the stainless projects from China;
  • Aveng Trident is closing their trading division, Mittal wanting to let estimated personnel complement of 2000 go, etc. Our industry is in distress.

Domestic: BER briefing: Searching for growth

“We have again downscaled the outlook for real GDP growth, both in 2019 and 2020.  A particular feature of the latest forecast update is a further significant worsening in the country’s fiscal ratios.  A main budget deficit of around 6% of GDP is expected for 2019/20.  Fiscal risks are on the downside.

After the release of much weaker-than-expected 2019Q1 GDP figures in early June, we downscaled the 2019 real GDP growth from 1% to 0.7%.  Subsequent developments have made us more circumspect about the pace of any growth recovery in the second half of the year.  These include the apparent lack of movement on key growth-enhancing policy reforms.  As a result, at a projected 0.2%, real GDP growth in 2019 is expected to barely positive.  A mild recovery to 1.1% is pencilled for 2020.

The combination of global growth concerns, low domestic growth and subdued inflation forced the SA Reserve Bank’s hand to reduce the policy interest rate by 25bps to 6.5% at its July policy meeting.  This was in line with our expectation.  This reduction is expected to be followed by a further 25bps cut at the September meeting.  However, this is by no means a certainty and depends on whether any of the key inflation risks materialise.”  (BER, August 2019)