WSD's weighted Index of Steel Activity (IDX) for the United States that measures activity levels in 15 steel-consuming industries is well down from the year-to-year growth rates that were experienced in the spring of 2012. The IDX is made up of four major segments: short-lead-time capital equipment, long-lead-time capital equipment, consumer goods and miscellaneous (agriculture and defense). In April 2012, the IDX was up 13 percent year-to-year and apparent steel demand was up 16 percent over the same period. However, in March 2013, the IDX was up, albeit marginally, at 0.1 percent year-to-year, while apparent steel demand was down 9.5 percent. In April 2013, the IDX was up 3.2 percent year-to-year.
The reasons for the major decline in apparent steel demand versus the IDX may include: a) steel buyer inventory liquidations; and b) a decline in steel intensity. When an economy expands at a fast rate, steel intensive sectors usually account for a larger amount of the expansion. However, when an economy is experiencing growth at a slow pace, the rise in services may be the prime driver of growth.
The strongest component of IDX in April 2013 was consumer goods, up 13.1 percent year-to-year; included is residential housing, up 16.1 percent year-to-year, automobiles up 15.7 percent year-to-year and household appliances up 0.9 percent year-to-year. The short-lead time capital goods index was down 0.5 percent and the long-lead-time capital goods index up 2.2 percent.
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