SMU Data and Models

SMU Steel Buyers Sentiment Index Suffers from Uncertainty

May 18, 2017

Buyers and sellers of flat rolled steel are slightly less enthusiastic about how they view their company’s ability to be success both in the existing, or current market environment as well as three to six months out into the future. There is an uncertainty that is becoming an issue to business as companies who buy and/or sell steel have to deal with Section 232 investigation, circumvention, Section 337 as well as the 1-year anniversary coming up soon on CORE, cold rolled and hot rolled AD/CVD suits.

As a single data point, Current Sentiment is being reported as being +70 which is three points lower (-3) than what was reported at the beginning of the month. Even so, the +70 is a very optimistic reading and only 7 points away from the record high for the Index set the first week of March 2017. The trend, however, is moving lower and can be better seen in our three-month moving average (3MMA).

The 3MMA is being reported today by Steel Market Update as being +73.33 which is down slightly from the +73.50 reported at the beginning of the month. Our 3MMA has been trending lower since the beginning of April when it peaked at +74.17.

Future Sentiment Also Tailing Off

Future Sentiment, which is how buyers and sellers of flat rolled steel see their company’s chances of being successful three to six months into the future, dropped 8 points since the beginning of the month of May. The eight point drop put our Futures Index at +67. One year ago the Futures Index was reported to be +61.

Looking at Future Sentiment from a three-month moving average (3MMA) the index has also been trending lower and is now at +71.67. At the beginning of May it was +73.0 and the record high for the Index was set during the middle of March at +73.67. One year ago, Future Sentiment was reported to be +67.

What Our Respondents are Saying

“Spot opportunities are slow, margins eroding.” This service center then went on to say, “demand seems to be slowing a little on the spot side, contract demand strong.”

“Business is steady.” Wrote another service center

A third service center said, “Appears to be slowing [business].”

“Concerned about pricing and profitability to much cheap steel still out in the market way more supply than demand right now on light gauge coated especially!” Service Center

“We will continue to seek business chances both domestically and from import. While now changes from import are more likely, Mfg need imports and they will always be a factor.” Trading company

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 right hand 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 left hand 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 which are conducted twice per month. We display the index reading on a meter on the Home Page of our website for all to enjoy.

Currently, we send invitations to participate in our survey to almost 600 North American companies. Our normal response rate is approximately 110-170 companies. Of those responding to this week’s survey, 36 percent were manufacturing and 45 percent were service centers/distributors. The balance of the respondents are made up of steel mills, trading companies, and 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.