SMU Data and Models
SMU Steel Buyers Sentiment: Bouncing Along the Top
Written by Tim Triplett
June 25, 2021
Steel buyers’ sentiment, as measured by Steel Market Update, remains extremely optimistic, and hasn’t seen a change of any real significance in the past three months. Current Sentiment has averaged a reading of +75 and Future Sentiment an average of +65, plus or minus a few points, since late April as the market enjoys the rush of record-high steel prices and profits.
SMU asks steel buyers every two weeks how they view their company’s chances for success in the current environment and how they view their prospects three to six months in the future. SMU’s Current Sentiment Index of +75 and Future Sentiment Index of +68 this week show the huge recovery from this time last year when the respective sentiment readings were a lowly +42 and +52 with the market in the grips of the COVID pandemic.
Measured as a three-month moving average (3MMA) to smooth out the variability, Current Sentiment stood at +74.83 this week, up just slightly from +73.33 two weeks ago. The Future Sentiment 3MMA was at +65.17, up a bit from +65.00 in the last survey.
The lack of much movement in SMU’s sentiment readings, which are near their all-time highs, suggests they have peaked. The next significant change seen will mostly likely be in a downward direction as the market reacts to the correction in steel prices that the experts say is coming. No sign of that yet in steel buyers’ buoyant attitudes, however.
What Respondents Had to Say
“The smart service centers are taking full advantage of these conditions. Even the “cost +” knuckleheads are making record-setting profits right now.”
“I’ve changed my tune here slightly, going from “Good” to “Excellent.” Let’s all just stay the course and keep it up.”
“There are a lot of unknowns right now. After going through a once-in-a-lifetime period, how do we come out of it—gradual pullback or large sudden drops?”
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 run from +10 to +100. A positive reading means the meter on the right-hand side of our home page will fall in the green area indicating optimistic sentiment. Negative readings run from -10 to -100. They result in the meter on our homepage trending into the red, indicating 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. Sentiment is measured via Steel Market Update surveys that are conducted twice per month. We display the meter on our home page for all to see.
We currently 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
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