SMU Data and Models
SMU Steel Buyers Sentiment Index: Optimism Tempered
Written by John Packard
December 6, 2018
About 60 percent of respondents to Steel Market Update’s market trends questionnaire feel their chances for success are good, if not excellent, given the current business conditions and their views of the next three to six months. Nearly all the rest consider their prospects only fair. Uncertainty on the trade and economic fronts, and perhaps the volatility on Wall Street, seem to have tempered some of the steel industry’s optimism.
The goal of the index is to measure how buyers and sellers of steel feel about their company’s ability to be successful today (Current Index), as well as three to six months into the future (Future Index). Results are posted as both a single data point and as a three-month moving average (3MMA), which smooths out the numbers and provides a clearer view of the trend.
Current Sentiment measured as a single data point registered +60, a highly optimistic level, certainly, but down 5 points from two weeks ago. Measured as a three-month moving average, Current Sentiment was 62.33, down a fraction from mid-November and slightly below year ago levels.
Future Sentiment
As a single data point, Future Sentiment registered +59, up 1 point from two weeks earlier. The 3MMA for Future Sentiment has been consistently below its averages in 2017 and at 60.50 is 5 points below where it was at this point last year.
What Our Respondents Had to Say
- “Our inventories are in good shape. Careful about buying. Concerned about demand.”
- “Fundamentals all good. Demand is key.”
- “In the plate market, demand is holding up positive. Inventories are low. Imports are not available.”
- “Getting more nervous with trade wars, auto closings and a plummeting stock market.”
- “It has been a very painful two months absorbing all the losses on inventory on hand and inventory heading in the door.”
- “There’s so much uncertainty, we are not so positive of next year’s success, but we’re trying to be optimistic.”
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, 36 percent were manufacturers and 51 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.
John Packard
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