SMU Data and Models

SMU Steel Buyers Sentiment Index 3MMA Continues Down Less Optimistic Road

November 19, 2015

Twice per month Steel Market Update (SMU) canvasses buyers and sellers of flat rolled steels on a wide variety of topics. One area we probe is how they feel about their individual company’s ability to be successful in today’s economy (Current Sentiment) as well as what they think business conditions will look like three to six months into the future (Future Sentiment).

SMU just completed our mid-November market analysis and buyers and sellers of flat rolled steel continue to be less optimistic of their company’s ability to be successful whether in the current market conditions or three to six months into the future.

We saw a slight increase in Current Sentiment which we are reporting today at +37. However, the three month moving average dropped significantly from the +42.50 measured at the beginning of this month to +39.83 today. Since the beginning of August we have seen our three month moving average (3MMA) on Current Sentiment decline by 17.5 points.

Future Sentiment dropped this week to +47. This is down 3 points from the +50 registered at the beginning of the month. Our three month moving average for Future Sentiment dropped by 1.83 points to +48.50.

Positive numbers are indicative of an optimistic market sentiment. The top of the range is +100 which would be when all respondents were reporting wonderful business conditions. The opposite extreme would be -100 which is the most pessimistic report possible.

So, our respondents are a little less optimistic than they have been and SMU is concerned about the trend we have seen developing over the past few months.

What our Respondents are Saying:

“Prices are at multi year lows, and demand is muted. There is a glut of available material in the marketplace. These conditions favor companies who remain lean.” Supplier to the industry

“This market sucks.” Trading company

“Oct business was much stronger than expected.” Manufacturing company

“The HVAC season has peaked and is starting to show a mild slowing trend.” Manufacturing company

“Lots of conversation, but fewer actual p.o.’s, everybody is being cautious.” Service center

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 and 40 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.