Buyers and sellers of flat rolled steel in North America remain positive about their company’s ability to be successful in the current market environment. The latest SMU Steel Buyers Sentiment Index is +43 down 6 points from the +49 reported during the middle of January 2012. The +49 was the highest measurement the Index has seen since its inception the first week of November 2008. The SMU Sentiment Index has been in optimistic territory since the 1st week of December 2010 (13+ months).

Those within the steel industry told Steel Market Update during the survey process that they remain upbeat due to a mild winter, slowly improving demand (and even some rays of sunshine in the construction segment of the market) and solid inventory levels as a number of respondents reported their inventory build to be over.

There were some cautious tones in some of the responses as well with responses like, “Varies considerably by market sector” and “Construction should be steady with limited spots of low growth.” Many in the steel industry expect 2012 results will be very similar to what was seen in 2011. One service center/wholesaler told SMU during the survey process, “We are not expecting any significant change in 2012 from 2011. Business will remain a challenge.”

Steel Market Update has found steel prices and future negotiations for steel pricing can have a positive or dampening impact on how steel buyers and sellers react to the market. Lower prices impacts the value of existing inventory which can create issues – especially within the service center community. At the moment market prices appear to have hit a plateau and are in “transition” as the market tries to determine if they will move sideways or lower from here. Although both our SMU price indexes and now Sentiment have broken lower over the past few days (see chart to the right).

SMU Future Sentiment at +55

Steel Market Update Future Steel Buyers Sentiment Index declined 8 points since the middle of January and is now being measured at +55 – well within the optimistic parameters of our Index. The Future Sentiment Index measures how buyers and sellers of flat rolled steel feel about their company’s ability to be successful three to six months into the future.

About the 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.