SMU Steel Buyers Sentiment Index Drops 12 Points
Steel Market Update (SMU) Steel Buyers Sentiment Index dropped 12 points since the first of June 2011 and is now registering a +13. The drop indicates steel buyers and sellers continue to be optimistic about their company’s ability to be successful in the current steel market but the level of optimism is waning compared to a where it was earlier this year when demand and prices both were showing positive results.
The +13 is the lowest reading for the SMU Sentiment Index this year. The Sentiment Index peaked the first week of April when it was measured at +40. The lowest reading ever recorded was in early March 2009 when the index was -85.
This is the largest single drop in our Sentiment Index going back to this same week in June 2010 when the index declined by 16 points from +7 to -9.
John Packard, Publisher of Steel Market Update and the founder of the SMU Steel Buyers Sentiment Index said, “Steel buyers, in their responses to this week’s Steel Market Update steel market survey, expressed concerns regarding price erosion in hot rolled and other products coupled with signs of weakening demand. Even those involved in segments of the steel industry which have been doing relatively well since the beginning of the year – such as automotive – were displaying signs of concern about the lack of strength in the overall U.S. economy.”
Comments Made by Respondents
“Still hitting numbers but lots of trepidation.”
“Fair to less than expected. We are a solar industry provider of steel racking systems - the 1H of the year is below plan and 2H will not catch up such that the full year will be well off plan to start the year.”
“Still not fully recovered, and manufacturing does not exist in a lot of markets to aid in any recovery.”
“The key word here is ‘today’. Still no significant uptick in the backlog. Extended commitments are not happening.”
“Business has slowed recently, the construction market continues to struggle due to inadequate supply of credit by the financial institutions.”
SMU Future Steel Buyers Sentiment Index also Declines by 12 Points
Respondents to this week’s SMU steel market survey also expressed growing concerns regarding their company’s ability to be successful looking out 3-6 months into the future. The SMU Future Steel Buyers Sentiment Index dropped by 12 points from +41 to +29 and, although it continues to be in optimistic territory, it is at the lowest level recorded so far this year.
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 actually display the index reading on a meter on the Home Page of our website for all to enjoy.
Currently we send invitations to over 775 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.
You can find our historical data on both the SMU Steel Buyers Sentiment Index and SMU Future Steel Buyers Sentiment index on our website in the research section of the site.