SMU Steel Buyers Sentiment Index: Optimism Moves Up with Prices

As a single data point the Current Sentiment reading of +47 is up more than 20 points from early October, before the flat rolled and plate mills announced their recent series of price increases. While showing considerably more optimism about current market conditions, the reading is still 18 points below the level at this time last year.

Measured as a 3MMA, Current Sentiment is at +37.83, up slightly from early November but still near its lowest levels in almost four years. 

Future Sentiment

Buyers also feel noticeably more positive about their prospects three to six months in the future. Future Sentiment as a single data point registered +51 in the latest data, up from +35 in early October. The Future Sentiment 3MMA is +42.67, a tiny improvement from the 42.00 level a month ago, which was its lower reading since July 2013.

All the current readings are above zero and on the optimistic half of SMU’s scale, therefore more positive than negative from a historical perspective. But they remain well below the readings that ranged from +58 to +65 at this time last year. 

Steel buyers sentiment has been trending downhill since 2017, as shown by the chart below tracking the annual rate of change in the three-month moving averages, but the small upturn at the end could be the beginning of a new trend.

What Respondents Had to Say

“Demand has not improved, but the cost base is increasing.” Manufacturer

“Nobody can operate successfully in these business conditions.” Service Center/Wholesaler

“Market oversupply by domestic mills and trade uncertainty and restrictions on imports of steel and aluminum are making this market very risky for imports.” Trading Company

“The next few months will be better as prices have bottomed out for the time being, but towards the end of the first quarter I see risk if demand softens and the market prices reverse.” Trading Company

“Our outlook is ‘cautiously optimistic’ like everyone else, but I’m not as optimistic.” Manufacturer

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 500 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 40 percent were manufacturers and 44 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.