SMU Data and Models

SMU Steel Buyers Sentiment Index: Moderately Optimistic

Written by John Packard

The Steel Market Update Steel Buyers Sentiment Index continues to be modestly optimistic although less so than what the index was reporting one year ago. The trend for the proprietary index has been to move sideways in what might be considered a not too hot, not too cold marketplace.

SMU looks at how buyers and sellers of steel feel about their company’s ability to be successful both in the current market environment as well as three to six months into the future. We have a full explanation of the point system being used at the end of this article but, for now you need to know that any reading with a plus (+) signals an optimistic response rate. The higher the number (maximum is +100) the more optimistic the group.

Sentiment is measured twice per month through the use of our flat rolled steel market survey. This week we measured Current Sentiment as being +56 which is 2 points lower than our early July report and 5 points lower than one month ago. One year ago Current Sentiment was reported as being +62.

Looking out three to six months our Future Sentiment Index is being reported as being +60 or, 4 points lower than at the beginning of July, 5 points lower than one month ago and 14 points lower than one year ago.

When looking at Sentiment from a 3 month moving average we found both Current and Future Sentiment to be relatively flat compared to the previous month and in both cases the 3MMA is lower than this time last year. The Current Sentiment 3MMA is +56.33 which is higher than the +55.17 reported one month ago and below the +59.83 measured one year ago.

Future Sentiment 3MMA is +61.33 which is one point higher than one month ago and below the +66.17 reported one year ago.

What Our Respondents Had To Say

“Some markets are hot, others are not.” Construction Related Manufacturer who went on to include the following comment, “Weather has been a huge factor this year. We now have a year’s worth of work to complete in the last half.”

“Inflated inventory levels (at least compared to current demand) continue to compress margins. Too many people are wandering outside of their boundaries, perhaps thinking the grass is greener on the other side. Maybe they should focus on fertilizing their own lawn first!” This service center went on to also report, “Spot market demand is improving, primarily from those who have relied on Chinese and Indian steel.”

“Steel plate business is heating up – one major plate mill is SOLD OUT for 2015 – things are tightening up.” Plate Service Center

“Tonnage is pretty much the same as last year, we don’t see any increase in demand. The economy in construction appears to be stalled.” Manufacturing Company

“Seasonal construction demand in Canada ramps up till Oct/Nov.” 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 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, 43 percent were manufacturing and 44 percent were service centers/distributors. The balance of the respondents are made up of steel mills, trading companies and toll processors involved in the steel business.

Click here to view an interactive graphic of the SMU Steel Buyers Sentiment Index or the SMU Future Steel Buyers Sentiment Index.

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