SMU Data and Models

SMU Steel Buyers Sentiment: Still Trending Positive

Written by Tim Triplett

Despite bad news on the coronavirus front, as authorities work to keep a surge in COVID-19 infections from derailing the economy once again, sentiment in the steel industry continues to trend positive. Steel Market Update’s Steel Buyers Sentiment Indexes are near levels comparable to this time last year, prior to the pandemic.

Since early April when Current Sentiment hit -8, the lowest reading since November 2010, the index has improved by 50 points. The current reading of +42 increased by a further 3 points in the past two weeks. At this point in 2019 the index had a reading of +49.


Future Sentiment

Steel Market Update asks steel buyers how they view their company’s chances for success three to six months in the future, as well as their current prospects for success. SMU’s Future Sentiment Index registered +52 this week, up 7 points since late June and an increase of 42 points since this year’s low in early April. Future Sentiment is 10 points higher than Current Sentiment, which suggests steel buyers are more hopeful about their prospects in the coming months.


Three-Month Moving Averages

Results from SMU’s market trends questionnaire are posted as both single data points and as three-month moving averages (3MMAs) to smooth out the trend. Both Current and Future Sentiment measured as 3MMAs continue to trend upward. The Current Sentiment 3MMA increased to +25.67, up from the recent low of +6.67 in late May.  The Future Sentiment 3MMA rose to +40.67 from the May low of +24.33.


The chart below shows the recent uptrend in the annual rate of change in the three-month moving averages for both Current and Future Sentiment.

What Respondents Had to Say

“Conditions seem to be deteriorating, numbers are falling and there is very little demand at the moment. Perhaps this is just a Fourth of July hangover or it could something more nefarious like a second wave of coronavirus hysteria.”

“We still feel good about the demand for our products and the steel environment, but the lumber side of our business, specifically treated lumber, may cause some grief that could prevent us from moving steel panels.”

“Still slow due to corona.”

“Covid-19 2.0.”

“Business was much better than expected in June, a 5 percent increase over June ’19.”

“COVID outbreaks keep a lid on any optimism.”

“We’re not seeing much data that would suggest any type of rebound in the near future. Mills tried to firm up the market with prices and that failed miserably.”

“I’m fairly optimistic, assuming business gets back to semi-normal. This being an election year, and the virus being a political weapon, it remains to be seen.”

“It all depends on the depth of the COVID second wave.”

“If the pandemic gets worse and the U.S. has to shut down again, things will move to awful.”

“The current unemployment situation cannot support the recent uptick in economic actively. The world needs a vaccine.”

“We’re concerned about late 2020 and early 2021 with repercussions of COVID on the economy and construction market.”

“We’d feel better if we knew how the construction sector is going to react to a second or third wave of COVID-19.”

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 100-150 companies; approximately 40 percent are manufacturers, 45 percent are service centers/distributors, and 15 percent are steel mills, trading companies or 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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