SMU Data and Models

SMU Steel Buyers Sentiment Index Remains Optimistic

Written by John Packard

Buyers and sellers of flat rolled steel who participated in our latest review of the steel industry continued to be optimistic regarding their company’s ability to be successful in the current market environment. The latest Steel Market Update (SMU) Steel Buyers Sentiment Index was measured at +40 during the first full week of November.

The latest reading is a +2 point improvement over our mid-October measurement and 9 points from the all-time high recorded in mid-January 2012. So far this calendar year +42 is the most optimistic recording which we gathered during our mid-August review. Compared to one year ago when Sentiment was +16 today’s reading represents a 24 point improvement. As you can see by the graphic, the second half 2013 has been much more optimistic than we what saw during the same timeframe last year.


On a 3 month-moving-average (3MMA) basis, early-November Buyers Sentiment is +39.33, the highest 3MMA reading since mid-April 2012 when it reached +40.33.

SMU believes the optimism being displayed is the result of stable to rising flat rolled steel prices as well as improvements in demand. Rising prices provide more value to existing inventories and make the spot market more profitable for service centers while stable to rising demand levels provide improved sales results. The Index was concluded prior to the AK Steel and Severstal NA price announcements.

Steel Market Update benchmark hot rolled coil is $660 per ton ($33.00/cwt) average this week which is $25 per ton higher than what we saw on October 1st. Other indices are reporting prices at, or very close, to our $660 number and that consistency can also be perceived as a positive for the market.

In our latest steel survey our respondents reported recorded improving demand (21 percent) at higher levels than declining demand (14 percent). The vast majority of respondents (65 percent) indicated demand levels as being stable.

SMU Future Sentiment Index Ties High for the Year

SMU Future Buyers Sentiment Index continued to be well ensconced within the optimistic range of our index at +53 tying our early July reading which at the time was the highest measurement for the year. The latest reading is a 3 point improvement over our mid-October number. One year ago SMU Future Buyers Sentiment Index was measured at +43.

Comments Made During Survey Process

“Our business has increased over the last few months but a lot of the increase is because of the time of year. We are expecting that the increase will not continue once we move into 2014.” Wholesaler.

“We have seen a noticeable pick up in orders.”  Service Center.

“Spot is hot!” Service Center.

“Very competitive.” Service Center.

The backlog of orders from our main customer segment has reduced by 50% in the last 2 months. Manufacturing Company.

About the SMU Steel Buyers Sentiment Index

SMU Steel 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 success 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 currently display the index reading on a meter on the Home Page of our website for all to enjoy.

Currently we send invitations to slightly more than 600 North American companies to participate in our survey. Our normal response rate is approximately 125-175 companies. Of those responding to this week’s survey 50 percent were manufacturing companies (up 3 percent from the previous survey’s 47 percent), 40 percent were service centers/distributors (down 2 percent from 42 percent at the middle of October) and the balance was made up of steel mills, trading companies, toll processors and suppliers to the industry (such as paint companies).

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.

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