SMU Data and Models
SMU Steel Buyers Sentiment Index Sees Renewed Optimism
Written by John Packard
December 8, 2016
SMU Sentiment Index Sees Renewed Optimism
The SMU Steel Buyers Sentiment Index has seen a renewed spurt of optimism based on our latest data. Sentiment, which had been trending lower since the beginning of July based on our three month moving average (3MMA) reversed course and moved higher this week. Our 3MMA for Current Sentiment is now +53.50 up from the +53.17 posted during the middle of November. We set an all time high the first week of July 2016 when we posted Current Sentiment 3MMA at +69.17.
We provide an explanation as to what the numbers mean and how we derive both Current and Future Sentiment indices both here as well as at the end of this article.
Looking at Current Sentiment, which is how buyers and sellers feel about their company’s ability to be successful in the existing market environment, saw a +7 point jump in optimism. Based on this week’s market analysis compared to that of two weeks ago when Current Sentiment was reported as being +58. One year ago Current Sentiment was +34 – an optimistic reading but much less optimistic than what we are seeing in today’s market.
SMU Future Sentiment Index
Future Sentiment, which measures how buyers and sellers feel about their company’s ability to be successful three to six months into the future, rose +8 points based on this week’s responses compared to those reported during the middle of November.
Looking at Future Sentiment data based on a 3 month moving average (3MMA) much like Current Sentiment saw a reversal in the trend as Future Sentiment improved to +61.33 compared to the +60.17 reported during the middle of November. One year ago Future Sentiment 3MMA was +46.83. The most optimistic we have seen the 3MMA for Future Sentiment was the +68.67 recorded during the middle of April 2016.
What our Respondents are Saying
“[The} end of the building season has arrived with the winter weather. Future sales will all be weather related.” Manufacturing company
“People are buying to delay impact of price increases for early 2017.” Service center went on to also say, “Seasonal decline but less than normal because people buying due to rapidly rising pricing and less import available! Not sure what interest rate bump and big price increases will do to the construction sector may see some projects and buildings put on hold!”
“Price exposure and the market volatility associated with it will continue to pressure the industry. Rapid and violent pricing swings until we figure out how to better manage risk and stop/minimize the stocking/destocking cycles that are feeding the frenzy.” Steel mill who went on to say, “Apparent demand (inventory building…restocking) is better. Consumption is not changing.”
“Nov. was better than expected, but business looks to be down slightly in the 1st qtr. Cannot tell if this is a result of mammoth price increases which are holding back steel releases, or an actual downturn in orders. Only time will tell!” Manufacturing 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, 43 percent were manufacturing and 44 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.
John Packard
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