U.S. steel consumption is on pace to decline 8% this year, according to a review of data available from government and industry sources. And, based on surveys of steel buyers, they have decided to continue low-key purchasing well into autumn.

Only 35% of Institute for Supply Management's Steel Buyers Forum surveyed in July expected orders to increase over the succeeding three months while 32% of the buyers polled by Purchasingdata.com in August expected orders to increase in the following 90 days. This reflects the view that "the steel market is far more chaotic than normal this year," according to analyst John Anton at Global Insight's offices in Washington.

Generally, there are "overriding cyclical trends" according to Anton, that pull all products in a common demand and/or price direction, with variance only in the degree of movement. "Yet this year, products are showing widely differing cycles" with some soft and others healthy. "A chaotic steel industry will be harder to predict," he writes to clients, "but it is now likely the norm."

Looking at the end of the third quarter, Anton suggests that "metalworking activity in the U.S. has hit a plateau." And there's evidence from buyers to support his view: About 25% of the ISM group believes incoming orders will decrease while 20% of the magazine's steel-buying readership says buying will decrease. That means that 40% of the ISM steel buyers say purchasing will be flat through September while 48% of the Purchasing-polled steel buyers say buying will be flat through October.

Commenting on the expected cautious buying trends ahead, analyst Mike Willemse at CIBC World Markets in Toronto says in a note to clients that he has "seen no signs of a demand or pricing rebound at the current time." Willemse does write that he continues to believe that "we could see a rising price environment for hot-rolled sheet over the next month or two as the manufacturing sector emerges from summer shutdowns and service centers end a destocking phase that has been taking place since October 2006."