SMU Steel Buyers Sentiment Index: Optimistic Readings, Pessimistic Comments

Measured as a single data point, both Current and Future Sentiment registered +61 in the latest index. Current Sentiment declined from +66 and Future Sentiment from +67 readings one month ago. Both saw their high points for the year in January with readings around +77/78. Any reading above zero (+) indicates those responding to our survey are optimistic about the markets. When numbers go negative (-), this represents a pessimstic group of buyers and sellers. In the history of the index, we have seen lows of -85 (March 1, 2009) as a single data point on the Current Sentiment Index to as high as +78 measured earlier this year.

While still at optimistic levels historically, the Current three-month moving average (3MMA) of +64.17 is at its low point for the year. The Current 3MMA peaked this year at +73.83 in mid-February.

Future Steel Buyers Sentiment Index

Future Sentiment—how buyers and sellers of flat rolled and plate steel view their company’s ability to be successful three to six months in the future—registered a 3MMA average of +60.33 in the latest data, up slightly from earlier in the month. Future Sentiment has seen little change since mid-year. At this time last year, the 3MMA for Future Sentiment was significantly higher at +67.33.

What Respondents are Saying

• “I think we are in for a little slower times.”

• “It seems to be getting worse with the uncertainty, and many customers are much more hesitant to buy. We need clarity.”

• “There’s a lot of inventory liquidation happening out there, driving down pricing and margins.”

• “Our order book is down 30 percent as imports take our market share. Section 232 makes downstream producers noncompetitive.”

• “I don’t foresee any clarity or positive developments within the next six months.”

• “Tariffs may be raised, which could cause a trade war. Once started it would be impossible to shut down, with worldwide repercussions.”

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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 righthand 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 lefthand 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 more than 600 North American companies. Our normal response rate is approximately 110-150 companies. Of those responding to this week’s survey, 40 percent were manufacturers and 43 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.