Current and future sentiment among flat rolled steel buyers has rarely been higher, according to the latest Steel Market Update Steel Buyers Sentiment Index. The index measures changes in buyers’ optimism levels, which offers insight into their likely decision-making. Nearly eight out of 10 respondents to SMU’s flat rolled steel questionnaire say their company’s chances for success in the current market environment, as well as three to six months in the future, are good, if not excellent.
Measured as a single data point, the average among those responding to this week’s questionnaire was +78, up from +73 two weeks ago, and what could be considered a multi-year peak.
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 + 71.33, up from +68.50 two weeks ago and at its highest level since early June.
Future Steel Buyers Sentiment Index
SMU 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 increased to +77 from +73 two weeks ago, setting a new high mark for SMU’s Future Sentiment Index.
As a three-month moving average, Future Sentiment registered +71.00, up from +68.83 in early January, and the highest level since May 2017.
What Respondents are Saying
Despite the generally positive sentiment in the market, comments from some respondents reveal concerns about trade and pricing:
• “There are too many unknowns still, especially on trade.”
• “It’s impossible to predict beyond Q2.”
• “With the normal seasonal slowdown, people in general are heavy in inventory as they bought in anticipation of rising first-quarter prices.”
• “Between Section 232, dumping and countervailing duties being levied, and rising domestic prices, companies that manufacturer parts from steel in the U.S. will have a very difficult time remaining competitive in a world market.”
• “The price increases have certainly improved our spot inventory position.”
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 more than 600 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 44 percent were manufacturers and 45 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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