Steel Products
SMU Steel Buyers Sentiment: Optimism on the Rise in 2021
Written by Tim Triplett
February 19, 2021
Steel Buyers Sentiment, as measured by Steel Market Update, hit a very optimistic +70 this week, not far from the highest reading ever recorded at +78 in January 2018. Future Sentiment was nearly as bullish at +63, just 14 points below its historical peak of +77, also in early 2018. Both Current Sentiment and Future Sentiment have made remarkable recoveries from near-record lows last April when the pandemic hit.
Every two weeks, SMU asks steel buyers how they view their company’s chances for success in the current environment, as well as three to six months in the future. Current Sentiment has inched steadily upward since the beginning of the year, likely reflecting the healthy demand and the staying power of record-high steel prices. While generally positive, comments from steel buyers show that many are concerned about the price correction expected to come sometime this year.
{loadposition reserved_message}
Three-Month Moving Averages
Measured as a three-month moving average (3MMA), Current Sentiment hit +65.67, its highest reading since July 2018, while the Future Sentiment 3MMA moved up to +60.50, its highest since April 2019. To give those numbers some perspective, the record high 3MMAs were around +74 in the spring of 2017; the record lows were about +40 in the fall of 2019.
What Respondents are Saying
“If you can’t succeed as a steel distributor in this market, your steel industry participation permit should be revoked.”
“I’d say our prospects are excellent, but the political unknown is a factor and you can’t account for its impact.”
“Transparency with customers about rising prices has been met with little resistance.”
“We are able to mitigate risk so far and still conclude new business, but when prices fall it will be another story.”
“The key is managing inventory and limiting it to what is absolutely essential to mitigate the pricing downside.”
“Steel is too expensive at this point.”
“We’re concerned about high-priced inventory.”
“The steel price correction that will come will challenge all steel users.”
“We don’t have enough HR and mid-range galvanized to sell.”
“Profits will be up, but overall volume is restricted by supply. No growth sales this year for sure.”
“Something has to give. We can’t keep having costs rise at this velocity and be short of supply at the same time.”
“Business is good, however, once we start to drop off the peak, nobody will make money—except the steel mills. Every service center and OEM will face declining inventory value.”
“We are not confident the market will get any better in the next six months and longer.”
“Shame on the mills!”
“We’re optimistic—after we dig out of all this snow and freezing temps in the South.”
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.
By Tim Triplett, Tim@SteelMarketUpdate.com
Tim Triplett
Read more from Tim TriplettLatest in Steel Products
CRU: EC to toughen steel safeguards
The European Commission proposes cutting its steel import quota by almost half, with volumes exceeding the limit facing 50% duties. The region’s steel industry welcomes the move, while other steel-producing nations fear the consequences. CRU published an insight before this announcement, noting that more restrictive trade policy could significantly raise the cost of marginal supply […]
US and Canadian rig counts stabilize
US counts continue to hover just above historic lows, while Canadian figures remain comparatively healthy.
Plate market sources critique mill hikes amid current market conditions
Following spot market plate price increase notices issued by domestic mills this past week, participants are contemplating the rationale behind the increases and whether they will stick. Some sources anticipate that current market conditions will shift in November and believe the increases may set a new "pricing floor."
Oregon Steel Mills lifts plate prices by $60/ton
Oregon Steel Mills has joined other producers in announcing a price increase of at least $60 per short ton on steel plate.
CRU: Construction of pilot plant for green steel process starts
Voestalpine and partners have begun building an industrial-scale Hy4Smelt demonstration plant in Linz, Austria, which they hope will become key in the decarbonization of steel.