SMU Data and Models

SMU Steel Buyers Sentiment Index Shows Signs of Worry

October 18, 2018

The attitudes of steel buyers and sellers, as measured by this week’s SMU Steel Buyers Sentiment Index questionnaire, are slightly less optimistic than they were at the beginning of October as the market waits for a turnaround in the decline in steel prices.

The goal of the index is to measure how buyers and sellers of steel feel about their company’s ability to be successful today (Current Index), as well as three to six months into the future (Future Index). Results are posted as both a single data point and as a three-month moving average, which smooths out the numbers and provides a clearer view of the trend. Any reading above zero (+) indicates those responding to SMU’s survey are optimistic about the markets. When numbers go negative (-), this represents a pessimistic group of buyers and sellers. In its history, the index has ranged from lows of -85 (March 1, 2009) to as high as +78 measured earlier this year.

SMU saw a big move in our Current Sentiment Index since the announcement of flat rolled price increases by Nucor and followed by a number of the domestic steel mills. Measured as a single data point, Current Sentiment registered +59 this week, down from +67 two weeks ago. While still at a very optimistic level on a historical basis, this is a low not seen since early March.

Measured as a three-month moving average, Current Sentiment is now at +63.50, down from +64.67 two weeks ago. The Current 3MMA has not been this low since January 2017.

The trend for Current Sentiment is sideways, with the 3MMA moving sideways for a number of months.

Future Steel Buyers Sentiment Index

The SMU Future Sentiment Index followed the trend we are seeing in the Current Sentiment numbers. Future Sentiment measured as a single data point also declined from +67 at the beginning of October to the current +53, the lowest mark since March. Registered as a 3MMA, Future Sentiment declined to +59.67 from +61.33 two weeks ago.

What Our Respondents are Saying

How do you feel about your company’s ability to be successful? “We’re starting to see some weakness in demand,” said one respondent. “Trade restrictions are fairly steady, but still not clear and clouding the future,” said another. “Still too much uncertainty,” commented a third. Added one executive, very succinctly: “232.”

About the SMU Steel Summit 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 righthand 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 lefthand 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 that are conducted twice per month. We display the index reading on a meter on the Home Page of our website for all to see. Currently, we send invitations to participate in our survey to more than 600 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 45 percent were manufacturers and 42 percent were service centers/distributors. The balance was 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