SMU Data and Models

SMU Steel Buyers Sentiment Index at +33

November 21, 2013

Buyers and sellers of flat rolled steel products continue to be optimistic about their company’s ability to be successful in the current market environment, however at lower levels than what we had been seeing over the past few months. The Steel Market Update (SMU) Steel Buyers Sentiment Index was measured this week at +33 down 7 points from the +40 recorded at the beginning of the month. The +33 is the lowest reading we have seen since the first week of June when Sentiment was +22.

The three month moving average also slipped for the first time in a couple of months. The 3MMA was measured at +37.83 down 1.5 points from this time last month.

We found a cautious attitude cropping into our most recent analysis of Sentiment. One area of concern appears to be the ongoing negotiations on 2014 contracts. Others expressed concern regarding demand as we move into the Holiday Season. Those responding to our questionnaire left behind telling comments:

“Confidence in the economy, even with the Dow and S&P running mad, is very cautious. We see a lot of work on the horizon, if it comes to fruition. The sidelines are full, but not many getting on the field and playing at this point.” Manufacturing company in the construction industry.

A Texas based service center told us, “Demand has not changed in the Texas market after multiple announced domestic mill price increases.” The service center told us that there was the potential for “severe margin squeeze” and that was causing them some concern.

Another manufacturing company advised SMU, “Demand seems to be stalling.”

While another told us, “We have excellent back logs but are order book has been down which is giving us a chance to catch up.”

Future Sentiment Index +45

Our Future Sentiment Index which measures how steel buyers and sellers feel about their company’s ability to be successful three to six months into the future was determined to be +45. This is down 8 points from the +53 measured at the beginning of the month of November.

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 currently display the index reading on a meter on the Home Page of our website for all to enjoy.

Currently we send invitations to slightly more than 600 North American companies to participate in our survey. Our normal response rate is approximately 125-175 companies. Of those responding to this week’s survey 51 percent were manufacturing companies (up 1 percent from the previous survey’s 50 percent), 37 percent were service centers/distributors (down 3 percent from 40 percent at the middle of October) and the balance was made up of steel mills, trading companies, toll processors and suppliers to the industry (such as paint companies).

Steel Market Update does canvass those being invited to participate in order to confirm their active participation in the flat rolled steel business. Our list is updated at least once per month and we are adding new companies on a continuous basis.