Results of the May 2018 Short Track Survey

The Sassda Short Track survey had 82 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:

33% of sassda respondents had a positive response to the current order situation which is about the same as a month ago (34%) and slightly lower than a year ago (36%). The weighted average (2.33) is slightly higher than last month (2.30) and a year ago (2.27).

For ISSF Flat Products, the results were:

For ISSF flat product producers, 64% of respondents had a positive response to their orders levels, which is better than a year ago (60%). The weighted average is also slightly higher (2.61) compared to April 2017 (2.58)

For ISSF Long Products, the results were:

For ISSF long product producers, 89% of respondents had a positive response to their order levels which is an improvement on last month (82%) and a year ago (79%). The weighted average (3.15) was however lower than March (3.23) but better than a year ago (3.01).

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

31% of sassda respondents thought the current business situation was positive, which is down on last month (36%) but up on a year ago (24%). The weighted average is slightly better this month (2.30) compared to last month (2.28) and is higher than that of May last year (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 55% for April 2018, which is the same as the previous 2 months but better than a year ago (46%).

For ISSF Long Products, the results were:

April had a 77% positive response which was slightly up on the previous month (76%). This was also an increase on the same month last year (58%). The weighted average of 3.03 was down on the previous month (3.05) but higher than a year ago (2.75).

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

The outlook in May showed a slight decrease in respondents’ business expectations in three months. 26% thought things would get better (compared to 28% in April). The weighted average of 2.72 is however higher than a year ago (2.48).

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 seen a slight decrease from April 2018 but this is still a great improvement from last year May (49.4% to 57.5%) and is still above the 50-point mark that separates expansion from contraction.

For ISSF Flat products. The results were:

In April 2018, 5% of respondents felt things would get better which is the worse than March 2018 (9%). The weighted average (2.44) is about the same as April 2017 (2.45).

For ISSF Long Products, the results were:

6% 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 a slight increase in sentiment on the same month last year with the weighted average rising from 2.37 to 2.59.

The comments received from Sassda members were:

  • … seems to be doing exceptionally well  due to the amount of work that has come in.
  • All good.
  • Continued low cost imports are hurting the local market and the unwillingness of Sassda to assist is not helping either.
  • Drought and smaller crops impacting on tank manufacturers and related industry
  • It looks like things are slowly starting to pick up again.
  • More certainty in the market, orders should follow soon. Thank goodness for the international orders.
  • Stainless steel is the future and progress with change will depend on the economic progress.
  • The early year positive sentiments, following the change in Presidential leadership, evaporated following the “land” statements. Our orders have reduced dramatically since March this year. Difficult to think that anyone would invest here without certainty around this issue.
  • The future looks good and very promising!
  • The industry is very quiet
  • The Zuma & Gupta’s SOE’s debacle coupled with the poor municipalities audit outcomes as well as the ridiculous  public sector wage bill will cripple the economy for at least two years before things even begin to improve.
  • There seems to be optimism with project houses, but there still seems to be delays on placing orders against quotes.
  • We have experienced some positive movement on the mild steel side, but stainless steel potential is poor.

According to the BER, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) dipped back to just below the neutral 50-point mark in May. The index declined to 49.8 index points, down from 50.9 in April. Despite the fall, the average level of 50.4 points recorded during the first two months of the second quarter is not only above the neutral 50-point mark, but also higher than the 49.2 index points registered in the first quarter. This bodes well for a recovery in the manufacturing sector, after manufacturing output contracted on a quarter-on-quarter basis in the first quarter of 2018.

According to a recent SEIFSA release, South Africa’s real GDP contracted by 2.2% in the first quarter of 2018, down from a revised 3.1% quarter-on-quarter (q/q) increase recorded in quarter four of 2017. The manufacturing sector was amongst the largest negative contributors, decreasing by 6.4%. SEIFSA Chief Economist Dr Michael Ade also cautioned on supply-side concerns that could slow quarter two growth in 2018 and further impede the expansion of the Metals and Engineering sub-component in the short term.

The industry seems to have taken a slight dip in sentiments over the last couple months but this is still better than this time last year. Anecdotal evidence from members would suggest a difficult few months ahead with expectations of an improvement in the second half of the year.

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