Current Steel Buyers Sentiment

Steel Market Update (SMU) Steel Buyers Sentiment Index rose +9 points since the middle of December and is now at +41 the highest level recorded since the index began in November 2008. The previous high for our Index was +40 which was recorded the first week of April 2011. One year ago SMU Steel Buyers Sentiment Index was 16 points lower at +25.

Steel buyers and sellers expressed optimism regarding their company’s ability to be successful in the current market environment.

Adam Woods, Chief Operating Officer of the Haydon Corporation told Steel Market Update, “I am more optimistic about 2012 than I have been about any year since 2008.” His sentiments are being reflected in our SMU Steel Buyers Sentiment Index which is clearly entrenched within the optimistic range.

In early November 2011 our SMU Steel Buyers Sentiment Index at +7 was at its lowest point since the middle of December 2010 when it was measured at +2. The domestic steel mills began announcing the first round of price increases during the first two weeks of November 2011 and the price cycle has been for prices to move higher since that point in time. Rising steel prices improves existing inventory values and allows both buyers and sellers an opportunity to improve margins. Many steel contracts are protected against a surge in spot pricing as they are attached to indexes which tend to lag the market.

The combination of prices firming coupled with gains in demand along with the potential tightening of supply related to the idling of the RG Steel Sparrows Point “L” blast furnace are attributing to the general sense of well-being being expressed by our SMU Steel Buyers Sentiment Index.

Those associated with Construction industry in North America were the lone voices expressing negative feelings about their company’s ability to be successful. A manufacturer associated with the construction industry told SMU, “Given the continued squeeze on margins the business conditions are bleak. Sell more at same low margins or focus on higher margin areas and reduce overall revenue?? No real wins in sight for construction it seems so stay the course and hope the natural course takes care of the weaker companies.”

SMU Future Steel Buyers Sentiment at a Record High

Steel buyers and sellers also expressed optimism regarding their company’s ability to be successful looking out 3-6 months into the future. For the first time since we began collecting our SMU Steel Buyers Future Sentiment Index data points our Index has exceeded +60 and is now +62. This is a +8 improvement over the +52 recorded in the middle of December and is +12 points better than one year ago.

The lowest reading produced during calendar year 2011 was +25 recorded at the beginning of October which was the low point in the last cycle. Since then our Future Sentiment Index has risen by +37 points to its current level.

Since November 2008 when we first began measuring Future Steel Buyers Sentiment the lowest reading recorded was -40 which was achieved in the middle of January 2009. This week’s +62 reading is the highest reading recorded since we began collecting Future Sentiment data.

About our SMU Steel Buyers Sentiment Index

SMU Buyers Sentiment Index is a measurement of the current attitude of buyers and sellers of flat rolled steel products in North America regarding how they feel about their company's opportunity for growth in today's market. It is a proprietary product developed by Steel Market Update for the North American steel industry.

Positive readings will run from + 10% to + 100% and the arrow will point to the right hand side of the meter located on the Home Page of our website indicating a positive or optimistic sentiment.

Negative readings will run from -10% to -100% and the arrow will point to the left hand side of the meter on our website indicating negative or pessimistic sentiment.

A reading of “0” (+/- 10%) indicates a neutral sentiment (or slightly optimistic or pessimistic) which is most likely an indicator of a shift occurring in the marketplace.

Readings are developed through Steel Market Update market surveys which are conducted twice per month. We display the index reading on a meter on the Home Page of our website for all to enjoy.

Currently we send invitations to over 700 North American companies to participate in our survey. Our normal response rate is approximately 150-200 companies. Of those responding approximately 48% are manufacturing companies, 49% are service centers/distributors and the balance is made up of steel mills, trading companies and toll processors involved in the steel business.

Steel Market Update does canvass those being invited to participate in order to confirm their active participation in the flat rolled steel business. Our list is updated at least once per month and we are adding new companies on a continuous basis.