SMU Buyers Sentiment Drops as steel buyers becoming more pessimistic
Jul / 23 / 2010 - SMU Buyers Sentiment Drops as steel buyers becoming more pessimistic
Results of this weeks SMU market survey show steel buyers much more pessimistic than 2 weeks ago
SMU Market Survey results from earlier this week show steel buyers and sellers continuing to express pessimistic attitudes regarding their company’s ability to succeed in the current market. Our SMU Buyers Sentiment reading declined from -13 at the beginning of the month of July to -20 this week. The -20 reading is the most pessimistic SMU has measured since the first week of March 2010. The SMU Buyers Sentiment index has dropped 27 points since it last positive reading recorded in early June. The highest reading for the year was recorded in early May 2010 at +9.
SMU Future Sentiment also dropped from +18 at the beginning of July to +8 this week - a drop of 10 points over the past two weeks and down from previous high readings achieved in mid April and early May 2010 when SMU Future Sentiment was measured at +33. The reading of +8 is the worst we have seen since early December 2009.
What our Respondents had to Say
“I still do not see any positive signs towards a "trend" in recovery. One day you see a positive sign in a sector, then the next day two other go south. Also, it does not provide a positive sign to the consumer when companies are hoarding their cash instead of investing that money in their employees, equipment or expansion. We see signs that things are slowly improving, but we have to build so much "fluff" into our futures steel pricing tables because we have to cover ourselves for the erratic behavior of the steel mills. When they smell an opportunity to raise prices, they do it without any forethought into the repercussion of their actions on the market. How do you plan for that...you can't, and the marketplace suffers. We cannot bid construction projects today using today's prices because these projects will not start in production for 6-9 months, so we are left guessing what steel pricing will be and possibly pushing projects outside of the owner's budget. When that happens, no one wins...from the Mills all the way down to the person that would have eventually collected a paycheck from the complex that was being built. Just think how many times that money would have turned in the economy...I think the Mills forget about their downstream impact on the economy.” Construction related manufacturing company.
“The answer to this question depends on the how honest your responders choose to be. In terms on the "old normal" business is poor, in terms of the "new normal" business is fair, better than last year only from a profit perspective and not volume. Business remains sluggish at best.” East coast service center.
“Even though our order books are still full, we feel strongly that at some point in the next few months we will start seeing a reduction in customer demand. Right now the demand does not match market trend.” Manufacturing company.
“Really concerned with double-dip possibility, combined with a 3Q of rising steel prices again.” Manufacturing company.
“We are hopeful that demand will come back, prices rose too fast and hence they are coming down too fast as well.” Midwest service center.
About SMU Buyers Sentiment Index
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.
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.
Currently we send invitations to just shy 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.
