SMU Data and Models
SMU Steel Buyers Sentiment Index Sets New Record Highs
Written by John Packard
April 21, 2016
Buyers and sellers of flat rolled steel continue to feel very good about their company’s prospects both in the existing market as well as looking out three to six months into the future. Steel Market Update (SMU) is of the opinion buyer optimism is connected to rising steel prices around the world which improves the value of inventories and expands margins.
Current Sentiment, which is how buyers and sellers feel about their company’s ability to be successful in the current market environment, was measured at +70.53. This is the highest single data point we have seen for Current Sentiment during the life of our Sentiment Index which goes back to November 2008. The current optimistic trend began shortly after the domestic steel mills announced their first price increase in this current cycle back in December 2015.
When looking at Current Sentiment from a three month moving average perspective, the +63.92 is the highest reading we have measured on our 3MMA over the life of the Index.
Future Sentiment, which is how buyers and sellers of flat rolled steel feel about their company’s ability to be successful three to six months into the future, is being reported as being +71.28. This is the third we have measured Future Sentiment at +71 (or better) over the past six weeks. Although not a record (the record is +74 reported in mid-July 2014), it is still a very optimistic number.
The three month moving average set a new record high at +68.71 beating the old record of +67.83 recorded during the first week of October 2014.
We will have new graphics available over the weekend once Brett returns from vacation.
What Our Respondents are Saying:
“Business stronger in April than first three months of the year.” Service center
“One anecdotal observation that supports my opinion…claims go way down when prices are increasing at the current rate.” Service center
“Our customers do not like the volatility of the domestic market. With the strength of the dollar, they are once again looking offshore to source manufactured steel components. Our outlook is not looking good.” Manufacturing company that went on to say later during the survey process: “Today’s coated steel market is a travesty! It’s not totally due to supply side economics as the demand side does share some of the blame but the mills have asked to be protected. Now they are and this is how they respond. Very poor in my opinion.”
“[Business is] good but getting better….” 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 100-170 companies. Of those responding to this week’s survey, 50 percent were manufacturing and 37 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.
John Packard
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