Expectations for y/y end demand growth over next three months
UBS Steel Buyer Survey #4
As COVID-19 escalated, we once again surveyed 78 US steel industry operators, mostly buyers, for a view on steel demand, prices and current industry insights. Respondents expect hot rolled coil prices to fall (from US$585/st in March) over the next three months.
Demand: Sentiment deteriorates versus November survey
75% of US steel industry operators expect a decline in end-product demand (e.g. manufactured products) over the next three months, while only 14% expect an increase. This is weaker than our November survey when 57% expected lower end-product demand versus 19% expecting an increase.
Oil, COVID-19 and scrap prices expected to most affect steel industry economics
71% of respondents believe that changes in demand, including COVID-19 issues, will have the largest impact on steel prices over the next 3 months, while14% of respondents expect scrap prices will have the largest impact. 74% of respondents expect lower oil prices to drive downside to steel demand.
UBS view: Data continues to support cautious view on the US steel sector
US construction reportedly benefitted from a mild winter, but other steel intensive markets continue to slow. The latest COVID-19 related business closures are reportedly driving order cancelations now. As steel producers keep operating and buyers temporarily closing (hereunder auto and energy) we expect inventory to build and prices to decline.