SMU Data and Models

SMU Steel Buyers Sentiment Index at Record High

Written by John Packard

This afternoon, Steel Market Update reported the SMU Steel Buyers Sentiment Index +68 for early August 2014. This is the highest level ever recorded and the most optimistic we have seen buyers and sellers of flat rolled steel since the Sentiment Index began in November 2008.

Positive numbers (above zero) indicate an optimistic attitude exists within the flat rolled steel industry as individuals within the industry report on their company’s ability to be successful in the current market. Our index canvasses manufacturing companies, service centers, steel mills, trading companies and toll processors who are involved with the flat rolled steel industry.

Sentiment has improved by 6 points over the past two weeks and is up 3 points from the previous record high which was recorded during the first week of July 2014. Buyers and sellers of steel are much more optimistic this year than last. Last year at this time Sentiment was measured at +38, 30 points lower than today’s record level.

When looking at Sentiment based on a three month moving average (3MMA) we are again at a record high +61.33. The previous high was set two weeks ago at +59.83. One month ago the 3MMA was +59.17 so we are consistently trending toward a more optimistic flat rolled steel industry. One year ago the 3MMA was +31.17.

What Was Said During the Survey Process

A number of those responding to this week’s survey left behind comments reporting business conditions for their company.

“We are near or over record shipment levels from several of our facilities,” what was one large service center wrote.  

One of the negative comments came from a trading company responding to our survey who told us, “Uncertainty of dumping suits keep importers on the sidelines. Domestic mills get the benefit without having to file.”

A secondary service center reported their business as being good, “but we are missing orders for lack of decent secondary material.”

We thought the comments left behind by a manufacturing company associated with the construction industry were quite interesting. This company called business conditions “good” but spoke about what may happen should the market take off in 2015, “…construction, especially commercial, is OK but still slow. It has never rebounded from 2007 and is still double digit percentages below where it was. Everyone says since 2008, next year, next year, but that has not come. If construction takes off in 2015 flat rolled will be like gold, even though [steel mill] productivity is near 80%, that’s on all products. Even now I believe flat rolled is closer to 90%. If the steel industry can finalize duties against flat rolled producers as they are trying to on tubular, we will be looking at allocation especially in CR, not enough anneal capacity based on what they can produce. If all remains the same and construction stays where it is, 4 to 5% pricing bump for all of 2015.”

Comments like this one appear to be affecting our SMU Steel Buyers Future Sentiment Index: “We should remain busy through the end of the year. When the weather starts to turn, our business will as well.” Manufacturing Company.

SMU Future Buyers Sentiment Index actually dropped by 5 points to +69 from the +74 we recorded two weeks ago. The +74 was the most optimistic level recorded for the Future portion of our index which measures how buyers and sellers feel about their company’s prospects for being successful 3 to 6 months into the future. One year ago our Future Sentiment Index was measured as +31.17.

About the SMU Steel Buyers Sentiment Indices

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

Currently, we send invitations to participate in our survey to almost 600 North American companies. Our normal response rate is approximately 110-170 companies. Of those responding to this week’s survey, 42 percent were manufacturing companies (down 2 percent from the 44 percent reported in our last survey) and 45 percent were service centers/distributors (up 3 percent from the 42 percent reported in our last survey). The balance of the respondents are made up of steel mills, trading companies and toll processors involved in the steel business.

Below is an interactive graph of our Sentiment Index (open white space if you are not on our website). In order to see and manipulate the graph you will need to be logged in on the SMU website. Contact us at: or by phone at 800-432-3475 if you need assistance.

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