SMU Future Buyers Sentiment Index Sinks, Current Sentiment Level

SMU’s Current Buyers Sentiment Index remained at +76, even with the last market check (Figure 1). Despite higher prices, the index has stayed in the mid-70s since the middle of January. 

SMU’s Future Buyers Sentiment Index measures buyers’ feelings about business conditions three to six months in the future. The index fell 12 points to +64 compared with two weeks ago. This is the first time it’s dropped below 70 since Jan. 5. The divergence between future and current sentiment seems to indicate buyers’ fears of economic headwinds later this year.

Measured as a three-month moving average, the Current Sentiment 3MMA moved up a point to +73.83 vs. +72.83 two weeks ago. (Figure 3). 

The Future Sentiment 3MMA slipped 1 point to +70.67 compared with the previous check. (Figure 4). 

What SMU Survey Respondents Had to Say:

“We are optimistic, but in six months we might be in an economic downturn.”

“It’s tougher the smaller you are. While you can perhaps fill niche work, others can’t. Steel costs are so wild the last few years that small shops dont have the deep pockets to always hold on.”

“The price increases have increased margins.”

“It’s still not a sustainable market. But then again it never is.”

“Not sure of the interest rate increase.”

“Interest rates and unusual economic situations.Uncharted waters. Usually not good.”

“At some point the interest rate hikes will take hold and slow the economy more than anticpated. I lived through the ’70s Paul Volcker rate hikes, which devastated the economy.”

About the SMU Steel Buyers Sentiment Index

The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior.

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 SMU surveys that are conducted twice per month.

We send invitations to participate in our survey to hundreds of North American companies. Approximately 45% of respondents are service centers/distributors, 30% are manufacturers, and the remainder are steel mills, trading companies, or toll processors involved in the steel business.

Click here to view an interactive graphic of the SMU Current Steel Buyers Sentiment Index and of the SMU Future Steel Buyers Sentiment Index.

By Ethan Bernard, ethan@steelmarketupdate.com