SMU Data and Models

SMU Steel Buyers Sentiment: Optimism Remains High

Written by Tim Triplett

As expected, Steel Buyers Sentiment declined over the past two weeks from record highs registered in early September shortly after Steel Market Update’s annual Steel Summit. The previous results were no doubt influenced by the conference, making the six-point change since then more of a correction than a decline.

The takeaway from the current index reading +78 is that sentiment has seen little change in the past six months. Despite concerns over COVID, buyers remain extremely optimistic about their chances for success given the current market conditions. With lead times and prices starting to turn, however, SMU will be keeping a close watch to see if sentiment follows suit.

Future Sentiment, as measured by SMU, dipped to +67 this week, an eight-point decline from the inflated readings in the last survey. The index, which measures steel buyers’ feelings about their prospects three to six months in the future, remains near the all-time high of +77 seen in February 2018.

Measured as a three-month moving average (3MMA) to smooth out the variability, Current Sentiment stood at +78.83 this week, tied with the last survey for the highest on record. The Future Sentiment 3MMA moved up to +70.50, its highest since February 2018.

What Respondents Had to Say

“Demand is slowing, even though for some products there is still pent-up demand.”

“Steel inflation to a greater extent will cause demand destruction.”

“Unsold inventory is likely to be a major problem.”

“Building products demand looks questionable.”

“I have changed my outlook from good to excellent, even with concerns about delta and microchips.”

“This is indeed a fun time for everyone in the steel world (the further upstream the better).”

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,

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