SMU Data and Models
SMU Steel Buyers Sentiment Index Drops to April 2014 Levels
Written by John Packard
February 5, 2015
Buyers and sellers of flat rolled steel are less optimistic about their company’s ability to be successful in the current market conditions than what we saw just two weeks ago. The buyers and sellers who participated in this week’s flat rolled steel market analysis reported concerns regarding falling steel prices, bloated inventories and shrinking margins.
The SMU Steel Buyers Sentiment Index is now at +46, the lowest figure since the first week of April 2014 when Sentiment was reported as being +43. Sentiment is down 10 points from the middle of January and is 8 points lower than what we saw one month ago. One year ago Sentiment was measured at +40, six points lower than where we find ourselves this week.
Below is an interactive graphic of the Steel Market Update Buyers Sentiment Index History, but it can only be seen when you are logged into the website and reading the newsletter online. If you need any assistance logging in or navigating the website, contact us at info@SteelMarketUpdate.com or 800-432-3475.
{amchart id=”109″ SMU Steel Buyers Sentiment Index- Survey}
Future Sentiment, which measures how these same buyers and sellers of steel feel about their company’s ability to be successful three to six months into the future, was measured to be +63. At plus 63 Future Sentiment is still well within the optimistic range of our index. At +63 it is up 1 point from two weeks ago but, it is down 7 points from one month ago. One year ago Future Sentiment was reported to be +50, 13 points lower than where we are today.
Below is another interactive graphic, but of the Steel Market Update Future Buyers Sentiment Index History.
{amchart id=”108″ SMU Steel Buyers Future Sentiment Index- Survey}
Looking at Sentiment based on a three month moving average (3MMA) basis, Current Sentiment is +52.67 which is the lowest 3MMA since May 2014. The latest reading is lower than the +55.83 reported on month ago. One year ago it was +39.33.
What Our Respondents are Saying:
“Demand is very good but pricing is poor hence the good comment and not excellent” Service Center.
Another service center told us, “Margin compression is a real concern.” He went on to say, “Need to get through the next 60 days or so.”
“Demand is weak, prices are dropping and payments are slowing – a perfect storm.” Service center.
A manufacturing company told us during the survey process, “Demand is weak, prices are dropping and payments are slowing – a perfect storm.”
Two manufacturing companies reported “Seasonal slowdown” in their businesses.
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, 46 percent were manufacturing companies (up 2 percent from our last survey) and 40 percent were service centers/distributors (unchanged from our last survey). The balance of the respondents are made up of steel mills, trading companies and toll processors involved in the steel business.
John Packard
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