SMU Data and Models

SMU Steel Buyers Sentiment Index: No Sign of an Upturn Yet

Written by Tim Triplett

Declining steel prices may have turned around following price increase announcements from the mills, but there’s no sign yet of a similar uptick in steel buyers’ sentiment. Steel Market Update’s Steel Buyers Sentiment Index, which has been generally trending downward for the past year, saw another slight dip in early March.

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. It’s important to note that the readings overall remain solidly in the optimistic half of the scale and the data has moved only within a narrow range, so there have been no big swings in industry sentiment for quite some time. Having said that, we want to note that Current Sentiment is well below the highs achieved at the beginning of 2018. Current Sentiment, as measured using our three-month moving average, was +72 one year ago.

Current Sentiment measured as a single data point registered +56 in the latest data, the low point of 2019 so far and about the same as this time last year (as a single data point). Measured as a 3MMA, Current Sentiment dipped to 57.17 from 57.83 two weeks ago and is now at its lowest point since mid-December 2016.

Future Sentiment

Asked to assess their chances for success in three to six months, steel executives’ responses show a little less optimism. As a single data point, Future Sentiment registered +58, down from +65 two weeks ago. Measured as a 3MMA, the Future Index averaged 59.83, nine points below this time last year.

What Our Respondents Had to Say

“Weather has been a factor in the Great White North.”

“Weather around the country and has really slowed shipments to the construction market.”

“Severe storms have damaged many areas, so there is a need for a lot of rebuilding and repair.”

“Import markets are getting harder to be successful. Risk of future trade cases and uncertainty has made things so difficult, I am not feeling comfortable about being very successful in the near future.”

“We hope for elimination of Section 232 shortly.”

“We are seeing some clouds on the horizon for the second half of the year and are concerned about a possible mild recession.”

“I expect some better vision and direction in the next several months. I am still not very confident about the future, but choose to look at the glass half full. I would say ‘fair’ is a very optimistic position.”

“I see clouds on the horizon.”

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, 39 percent were manufacturers and 47 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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