SMU Data and Models
SMU Steel Buyers Sentiment Index: Positive End to 2017
Written by Tim Triplett
December 21, 2017
Current and future sentiment among flat rolled steel buyers improved further in December, according to the Steel Market Update Steel Buyers Sentiment Index, mirroring the pattern at this time last year that heralded a strong first quarter.
The SMU Steel Buyers Sentiment Index measures changes in buyers’ optimism levels, which offers insight into their likely decision-making. Most buyers and sellers of flat rolled steel remain optimistic about their company’s ability to be successful in the current market environment, as well as three to six months into the future.
Measured as a single data point, the average among those responding to this week’s flat rolled steel market trends questionnaire was +76, up from +70 two weeks ago and at its highest level since early March. At this time last year, the reading was +70.
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 truer picture of the trend. The Current Sentiment 3MMA is at +65.50, up from +63.83 two weeks ago and at its highest level in more than three months.
Future Steel Buyers Sentiment Index
SMU also asked respondents how they feel about their company’s ability to be successful three to six months in the future. Future Sentiment indexed as a single data point also improved to +74 from +71 two weeks ago. Future Sentiment has not been this high since February.
As a three-month moving average, Future Sentiment registered +66.67, up a full point from earlier in the month. Last year in mid-December, the Futures Sentiment Index was a less-optimistic +63.17.
In general, steel buyers are finishing the year on an optimistic note, which bodes well for business in the first quarter.
What Respondents are Saying
Despite an overall upbeat outlook, not all steel buyers are completely satisfied:
• “Business is OK, but not booming.” Service Center/Wholesaler
•”Demand is steady, but sourcing is questionable, especially imports.” Trading Company
• “There is pushback on new coated pricing. They are basically trying to push through two base price increases and a zinc increase.” Steel Mill
• “Hard to make much margin selling steel when prices reach these levels.” Service Center/Wholesaler
• “Trade cases are the key.” Trading 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 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, 47 percent were manufacturers and 40 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.
Tim Triplett
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