SMU Data and Models

SMU Steel Buyers Sentiment Index: Off From Last Year

Written by Tim Triplett

Industry sentiment remains well below levels of a year ago, as measured by Steel Market Update’s Steel Buyers Sentiment Index. While still at a healthy level and solidly within the optimistic range, sentiment is clearly being tempered by the many market uncertainties. Now that it appears steel prices have hit bottom and may be on the rebound, SMU will be watching to see if we get a corresponding uptick in buyers’ attitudes.

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 single data points and as three-month moving averages (3MMAs) to smooth out the trend.

Current Sentiment measured as a single data point registered +59, little changed in the past three months. While still on the optimistic side of the scale, the reading is off significantly from the +71 registered at this time last year. Measured as a 3MMA, Current Sentiment dipped a point to 57.83 from 58.83 two weeks ago and is now at its lowest point since Dec. 15, 2016.

Future Sentiment

Asked to assess their chances for success in three to six months, steel executives’ responses show a slight uptick. As a single data point, Future Sentiment registered +65, up from +59 two weeks ago. Measured as a 3MMA, the Future Index averaged 60.00, well below the 72.67 at this time last year.

What Our Respondents Had to Say

“The economy is good.”

“Demand is strong.”

“Demand is stable and consistent. Supply is uncertain but seems stable at the moment.”

“If any new trade tariffs or AD/CVD cases are announced, we will have problems with imports and future business is questionable.”

“Steel prices need to firm up. If the slide continues, it will be difficult.”

“There’s too much overpriced inventory. People are selling at down and dirty numbers.”

 “Uncertainty, uncertainty.”

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 48 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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