Reuters reported that steel customers have reduced inventories, but the stockpiles are still too high to indicate demand may be improving or that the economy is turning back up.

Ms Michelle Applebaum steel analyst, in her survey of service centers, said that "The end of the inventory purge should bring an increase in apparent demand, but it is clear that a substantial improvement in activity could be a long way off. While March's survey shows some improvement in matching supply with demand, there is clearly room for further destocking as industry players would rather play it safe than jump back in at the first sign of a pickup in demand."

In the last 6 months, steel manufacturers have cut production to maintain prices, but the prices are still low as the global economic downturn stunted demand. Service centers, which usually run higher stockpiles, are having difficulty selling steel they bought at higher prices and lowered inventories as demand faded.

According to the survey conducted by Michelle Applebaum Research, 65% of respondents said inventory levels in March stood at less than two months supply. That was up from 56% in February. The number of respondents who described their inventory levels as too high when compared with demand fell from 69% in February to 47% in March. But 71% of respondents reported they will lower inventories in the coming months, only a slight decline from 75% in February.

For the steel industry, 41% expect a slowdown compared with 56% in February. The economic downturn continues to take a toll on businesses, however, as 47% reported customers paying less promptly than 3 months ago, up from 38% in February and the highest level in five and a half years.

(Sourced from www.reuters.com)