SMU Data and Models

SMU Steel Buyers Sentiment: Year Ends with Bullish Outlook
Written by Tim Triplett
December 22, 2021
Steel Buyers Sentiment, as measured by Steel Market Update, has not reacted much to declining steel prices. Perhaps because prices remain well above historical averages even after big declines – more than 18% when it comes to hot-rolled coil – over the past three months. Indeed, 2021 was a record year for many companies, leaving most buyers with a bullish outlook on the year ahead.
SMU surveys buyers every two weeks and asks how they view their chances of success in the near and longer term. SMU’s Current Buyers Sentiment Index registered +72, down three points over the past two weeks, but still just 12 points away from the all-time high of +84 registered in early September.
Future Sentiment – which measures steel buyers’ feelings about their prospects three to six months in the future – increased by one point to +71, just seven points below the record reading of +78 seen last month.
Measured as a three-month moving average (3MMA) to smooth out the variability, the Current Sentiment 3MMA stood at +76.33 this week, while the Future Sentiment 3MMA was at +71.67, on the 100-point scale.
Steel buyers’ sentiment may be a leading indicator when prices are on the way up, but it appears to be a trailing indicator on the way down. Steel prices are widely forecast to continue eroding well into next year. Will sentiment follow suit? Much depends on how well the market weathers the clouds on the horizon – inflation, COVID, and supply-chain bottlenecks chief among them.
What Respondents Had to Say
“Demand looks good into H1 – Fed rate increases notwithstanding.”
“My outlook has officially moved from ‘Excellent’ to ‘Good,’ but I’ll still take that in this industry.”
“It’s difficult to keep passing on price increases, which appears to be starting to impact sales.”
“There’s way too much uncertainty in the future. Trade cases, economic fallout from COVID-19 restrictions, and governments thinking they can control inflation. Watch out, the sky is not falling!”
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.
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
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