Both Current and Future Sentiment showed a slight decline as a single data point in the latest SMU Steel Buyers Sentiment Index, based on data gathered in mid-September. The index measures how buyers and sellers of flat rolled 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.
Overall, the indexes have remained at optimistic levels throughout 2017, though the small but frequent ups and downs may reflect steel buyers’ fluctuating uncertainty about market conditions. Hurricane Irma and the destruction it brought to the Southeast last week may also have been weighing on respondents’ minds.
Indexed by SMU as a single data point, Current Sentiment is at +66, down 3 points from the data collected two weeks ago. One month ago, sentiment was about the same at +65. Steel buyers are significantly more positive today than they were a year ago when the index was at +49.
SMU’s preference is to look at the data based on a three-month moving average (3MMA), which smooths out the index and provides a better look at the true trend. The Current Sentiment 3MMA is at +65.83, little changed from two weeks ago. The downtrend in sentiment appears to be starting to level out after declining steadily since peaking at +74.17 in early April.
Future Steel Buyers Sentiment Index
SMU also asked respondents how they feel about their ability to be successful three to six months in the future. Future Sentiment indexed as a single data point registered +68, down 5 points from early September, but about the same as early August and considerably more positive than this time last year when the Future Sentiment was at +59.
As a three-month moving average, Future Sentiment registered +67.33, a slight uptick from two weeks ago and a bump from one month ago when the index was at +66.00. Buyers and sellers are feeling somewhat more optimistic than they were at this time last year when the index was at +62.83. The peak in the Future Sentiment 3MMA in the past year occurred in mid-March at +73.67.
According to SMU’s analysis, the moving averages for both current and future sentiment have been gradually trending toward less optimistic levels for most of this year, but the figures for the last month show no such erosion, which may be a positive sign for the market.
What Respondents are Saying
Even though 7 out of 10 respondents to SMU’s questionnaire see their opportunity for success a few months in the future as good or even excellent, comments from a few show concerns about current market conditions. One service center executive described the market as “not great, not bad, just OK.” Commented one trader: “Until Section 232 is finalized, our company does not want to take large risks. We are limiting our offers for a select few accounts.” Said another trader: “The market seems softer now. Something needs to change to make customers more willing to buy. For now, we are stuck on the sidelines.” He added: “There’s still so much uncertainty. Trade cases are looming and threats of future restrictions on trade are still more likely to happen than not.”
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 righthand 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 lefthand 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 that are conducted twice per month. We display the index reading on a meter on the Home Page of our website for all to see. Currently, we send invitations to participate in our survey to almost 600 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 35 percent were manufacturers and 49 percent were service centers/distributors. The balance was 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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