Results of the May 2019 Sassda Short Track Survey

The Sassda Short Track survey had 45 respondents in May. 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:

20% of Sassda respondents had a positive response to the current order situation, which is a decrease, when compared to April (23%) and worse than a year ago (33%). The weighted average (2.00) is better than April and worse than a year ago (2.33).

For ISSF Flat Products, the results were:

For ISSF flat product producers, 63% of respondents had a positive response to their orders levels, which is lower than a year ago (64%). The weighted average is higher (2.68) compared to April 2018 (2.61).

For ISSF Long Products, the results were:

For ISSF long product producers, 53% of respondents had a positive response to their order levels which is the lower than last month (73%) and worse than a year ago (89%). The weighted average (2.72) is worse than March (2.75) and lower than a year ago (3.15).

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

11% of Sassda respondents thought the current business situation was positive, which is lower than April (25%) and lower than a year ago (31%). The weighted average is lower (1.89) compared to last month (2.00) and is worse than May last year which was (2.3).

For ISSF Flat Products, the results were:

The percent of respondents who felt that the current business situation was sufficient or good stood at 53% for April 2019, which is lower than the previous month (57%) and higher than a year ago (55%).

For ISSF Long Products, the results were:

April decreased with 38% positive response compared to 50% for the previous month. This was worse than the same month last year (77%). The weighted average of 2.27 was lower than the previous month (2.39) and lower than a year ago (3.03).

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

20% of respondents thought things would get better which is lower than the previous month (21%). However, 13% 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 a further slight increase in expectations.

For ISSF Flat products. The results were:

In April 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 April 2018 (2.44).

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 lower than last month (2.45) and lower than a year ago (2.59).

The comments received from Sassda members were:

  • The economic climate has not shown any growth, notwithstanding the new elected cabinet.  Furthermore, the amount of large funds leaving the country, is of major concern;
  • The continued dumping of products from China is seriously damaging the local industry and everyone is sitting with folded arms;
  • Imports are starting to take market share.

Domestic: Q1 GDP contracts sharply, vehicle sales and PMI paint gloomy picture for Q2 (BER 10 June 2019)

“According to Stats SA, real GDP declined by a much larger-than-expected 3.2%
q-o-q (annualised) in 2019Q1. This marks the biggest contraction since the global financial crisis. Compared with the first quarter of 2018, real GDP growth (seasonally adjusted) was basically flat at 0.1%. Measured from the production side, the GDP weakness was broad-based. Indeed, seven of the ten major sectors contracted in Q1. As signalled by the monthly Stats SA data, the major contributors to the GDP decline were manufacturing, mining and the trade (retail, wholesale, hotels and restaurants) sectors. From the demand side, the theme of industry weakness is borne out by the sharp decline in exports during Q1, as well as the fifth consecutive quarter of contraction in fixed investment. Furthermore, household consumption also contracted in 2019Q1, after a robust performance in 2018Q4.

Incoming data for Q2 also remains poor. According to Lightstone Auto, aggregate domestic new vehicle sales contracted by 5.7% y-o-y in May. This follows the marginal annual uptick of 0.7% registered in April. Passenger car sales contracted by 1.4% y-o-y. For the first two months of Q2, total new car sales are down almost 3% y-o-y. Export sales unexpectedly fell for the first time this year, declining by 8.8% y-o-y to 29 850 units. Despite the drop in May, year-to-date export sales are still 20.1% higher than the same period last year. The National Association of Automobile Manufacturers of South Africa (NAAMSA) expects local car sales to remain weak due to low consumer and business confidence levels, as well as increasing pressure on the disposable income of households.

The seasonally adjusted Absa PMI fell to 45.4 index points in May from 47.2 points in April. The decline brought the average PMI for the first two months of the second quarter to 46.3 points, below the first quarter average of 47.1 points. This does not bode well for a recovery in manufacturing sector activity after output declined notably on a quarter-on-quarter basis in the first quarter. The first tranche of economic data for 2019Q2 does not suggest a strong GDP recovery in the second quarter following the sharp contraction in Q1. While we do expect to see improved GDP numbers over the rest of the year, the momentum is unlikely to be particularly robust. In an interim update, the BER now expects full-year growth to measure 0.7% y-o-y, down from 1% forecast in April.”