SMU Steel Buyers Sentiment Index
Twice per month, Steel Market Update surveys the flat rolled steel industry. One of the proprietary products which is derived from that expansive survey is the SMU Steel Buyers Sentiment Index. Sentiment is defined as how buyers and sellers feel about their company’s ability to be successful both in the existing market environment (Current Sentiment) as well as three to six months into the future (Future Sentiment).
Based on a single data point our Current Sentiment Index rose from +58 at the beginning of the month to +61 today. One year ago our Current Sentiment Index was reported to be +53. So, we have a more optimistic industry than what we were seeing at this point in time last year.
We have a different result when looking a our Current Sentiment Index using a three month moving average (3MMA). The 3MMA smooths out the data and provides a clearer picture of the underlying trend. The 3 month moving average is +64.67 which is 1 point lower than at the beginning of the month; the trend has been for a less optimistic market after the first week of July when our 3MMA peaked.
SMU Future Steel Buyers Sentiment Index
We also reviewed Future Sentiment and found the +64 from this week is the same as the beginning of the month and is +7 points from one month ago. One year ago Future Sentiment was +58.
On a three month moving average basis, Future Sentiment came in at +65.67 up from the +65.17 posted at the beginning of August. Future Sentiment had been on a long run higher going back to December 2015 which is when the domestic steel mills began raising prices. One year ago, Future Sentiment was +60.67.
What our Respondents are Saying
“I still believe that the disparity between foreign and domestic has created an unfair market for steel service centers. Domestic pricing is truly unreasonable.” Service center went on to say, “I am cautiously optimistic coming into the fall season. Jul/Aug is typically slower but this year a little more so than normal. This week a little spike.”
“Too much uncertainty right now.” Service center
“Solid demand as of today, some concern about post-election world…” Service center
“It would hurt big time if prices fell.” Wholesaler
“Several mills are scheduling their outages from September through November – that’s 200 to 300 thousand tons of volume out of the market.” Steel mill
“A lot of AD issues.” Trading company
“Booking into December.” Service center
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, 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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