Results of the September 2018 Sassda Short Track Survey

The Sassda Short Track survey had 86 respondents in September which is a good increase compared to the last few months. 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:

31% of Sassda respondents had a positive response to the current order situation which is worse than a month ago (41%) and a year ago (39%). The weighted average (2.16) is also worse than last month (2.40) and a year ago (2.33).

For ISSF Flat Products, the results were:

For ISSF flat product producers, 62% of respondents had a positive response to their orders levels, which is lower than a year ago (78%). The weighted average is also lower (2.54) compared to August 2017 (2.78).

For ISSF Long Products, the results were:

For ISSF long product producers, 83% of respondents had a positive response to their order levels which is the same as last month (83%) and better than a year ago (78%). The weighted average (3.03) is the same as June (3.03) and a year ago (2.83).

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

24% of Sassda respondents thought the current business situation was positive, which is down on August (33%) and on a year ago (32%). The weighted average has shown a decrease this past month (2.14) compared to last month (2.25) and is down on September last year (2.25).

For ISSF Flat Products, the results were:

The percent of respondents who felt that the current business situation was sufficient or good stood at 57% for August 2018, which is up on the previous month (52%) but less than a year ago (61%).

For ISSF Long Products, the results were:

August took a bit of a drop with 65% positive response compared to 71% of the previous few months. This was however better than the same month last year (50%). The weighted average of 2.73 was the same as the previous month but better than a year ago (2.57).

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

 

12% of respondents thought things would get better (compared to 21% in August). 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.

The expectations index continue to deteriorate from the highs seen in February and is now marginally below the 50 point mark.

For ISSF Flat products. The results were:

 

In August 2018, none of the respondents felt things would get better with 5% expecting things to get worse. The weighted average (2.45) is also lower than August 2017 (2.56).

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 12% thinking it would get worse. The weighted average of 2.41 is the same as last month but worse than a year ago (2.79).

The comments received from Sassda members were:

  • Interesting what impact the weakening of the rand has on our ability to secure export orders. In the months of August and September our forward order book for the calendar year 2019 went from 23% to 87%
  • Not much work coming from industry to electropolish
  • Policy uncertainty is crippling our economy
  • [South Africa} is in need of an urgent economic stimulus. The land issue is a major topic. Uncertainty surrounding the land grab without compensations [is] the biggest deterrent. CEOs are considering placing all investments on hold and have concerns over the brain drain and capital flight, further shrinking the tax base which add to SARS current deficit woes.
  • The number of stainless steel enquiries is diminishing monthly. Thankfully, the mild steel division is busy.
  • The only major project is from Sappi-Saiccor…RBillions. SAPREF has ongoing maintenance project. Prices are only available on each inquiry. Machine shop industry is very quiet. Sugar mills are preparing for their annual shutdown in November through to January 2019. Noting else to report.
  • We have to start looking outside of South Africa for new business, as local is no more lekker!

 

In conclusion, it can be seen that there has been a deterioration in sentiment of Sassda members. This is in the context of

  • South Africa being in the longest downward business cycle since 1945, according to a report by the Centre for Risk Analysis (CRA) at the Institute of Race Relations (IRR),
  • The International Monetary Fund downgrading South Africa’s GDP expansion forecast for 2018, joining the World Bank and the SA Reserve Bank in lowering growth projections,
  • The JSE All Share Index being at 53864.98, at the time of writing, down 12.7% from the all-time high of 61684.77 seen in January of 2018.

Thanks and Kind Regards

Angie Baker

KZN Regional