SMU Steel Buyers Sentiment Index Drops 11 Points
Steel Market Update (SMU) Steel Buyers Sentiment Index dropped 11 points since the middle of July and is now at +14. The SMU Sentiment Index has remained in “optimistic” territory since December 1, 2010 (36 weeks). The SMU Sentiment Index peaked in early April when it was measured at +40. The +14 measured through our survey which was conducted earlier this week is the second lowest reading we have seen in the Index this year.
John Packard, Publisher of Steel Market Update and the founder of the SMU Steel Buyers Sentiment Index made the following statement, “Steel buyers and sellers are telling Steel Market Update their concerns are two-fold: dropping steel prices and questions about demand. Falling steel prices impact their company’s ability to be profitable and questions about demand raise concerns about their ability to grow in the current business environment.”
SMU received the following comments during the survey process which was conducted earlier this week:
“Prices are dropping like a rock, tough to take orders since we will break even or lose money on them.” (service center)
“Incoming inquiries and orders have slowed considerably over past 4-6 weeks.” (conversion steel mill)
“Too much competition not enough business to go around.” (HVAC wholesaler)
“Customer orders have decreased.” (construction related manufacturer)
“July volume ok, profits hit hard!” (service center)
SMU Future Steel Buyers Sentiment Index Drops
The Steel Market Update Future Steel Buyers Sentiment Index remains in “optimistic” for the 88th week. SMU Future Sentiment was measured at +35 which is 10 points lower than two weeks ago but well within the optimistic range.
Buyers and sellers of steel told SMU during the survey process:
“We feel good about the week to week bookings that we seem to secure, but continue to struggle with the lack of backlog which makes three to sixth month forecasts virtually impossible.” (service center)
“I'm optimistic primarily because I believe my company has become better at controlling what we can control and reacting quickly to changing market situations. That and we have a lot of cash.” (manufacturer)
“We remain optimistic, even as the market continues to search for a bottom price wise. If we could get an extended period of price stability we could see sustained growth from our customers.” (service center)
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 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.