SMU Steel Buyers Sentiment Index: Ready to Bounce

SMU’s preference is to look at the data based on a three-month moving average (3MMA), which smooths out the index and provides a truer picture of the trend. The Current Sentiment 3MMA is at +63.67, down slightly from +64.17 one month ago, but up +10 points from the same time last year. The Current Sentiment 3MMA continues the very gradual downtrend that began in January, though sentiment remains considerably stronger than last November. If the upward trend continues as it has over the past few years, the SMU Steel Buyers Sentiment Index 3MMA may well exceed the highs seen earlier in 2017 when Sentiment peaked at +73.

Future Steel Buyers Sentiment Index

SMU also asked respondents how they feel about their company’s ability to be successful three to six months in the future. Future Sentiment indexed as a single data point registered +66, up +6 points from this time last month, but also about average for the second half of the year.

As a three-month moving average, Future Sentiment registered +66.17, down slightly from +66.67 a month ago. Last year in early November, the Futures Sentiment Index was at +60.33. It peaked at 73.67 in mid-March. Like current sentiment, future sentiment has been gradually moving toward less optimistic levels for much of 2017.

However, looking at the graphs for both current and future data, the bars illustrate that steel buyers have been more optimistic throughout 2017 vs. 2016, particularly later in the year. Sentiment trended up in the last two months of 2016. If this year follows the same seasonal pattern, 2018 could start off with more momentum than what we saw last year. This could represent a strong positive for the steel markets.

What Respondents are Saying

· “October was a little ‘scary,’ never got any real traction.” Service Center/Wholesaler

· “Still a lot of uncertainty, but demand is steady, so it seems people will continue to need to buy.” Trading Company

· “Pricing is very competitive; margins are constricted.” Manufacturer

· “Without foreign steel, it is even more difficult for the medium-sized service centers to compete with the bigger companies.” Service Center/Wholesaler

· “Outlook is bearish for the balance of 2017. Looking forward to a good bounce in 2018. Don’t laugh, it’s not that far away.” Service Center/Wholesaler

· For imports, it all depends on how restrictive the current administration gets. Free/fair trade is what we always need.” Trading Company

· “Still apprehensive about legislative options, Section 201 or 232, and how that will affect the market in the first and second quarter. At this time, demand is holding steady.” Service Center/Wholesaler

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 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 almost 600 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 38 percent were manufacturers and 46 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.