SMU Steel Buyers Sentiment Index: Year Ends Less Upbeat Than it Began

Current Sentiment measured as a single data point registered +54, still an optimistic level, but down 11 points over the past month and the lowest reading in the past two years. Measured as a three-month moving average, Current Sentiment was 61.17, down from 62.83 in mid-November, and also the lowest reading since early 2016. Optimism was the highest his year when the Current Index registered +78 in mid-January.

Future Sentiment

The downtrend in optimism is much the same for steel executives asked to assess their chances for success in three to six months. As a single data point, Future Sentiment registered +57, down 2 points from early in December and down 20 points from the 2018 high of 77 in February. Measured as a three-month moving average, the Future Index was 59.83, well off the high of 72.83 in February.

What Our Respondents Had to Say

• “It’s a very tough environment. We’re looking for some leadership from the mills. They need to put a bottom on steel prices.”

• “There are still too many unknown variables that could affect swings. As a result, I believe many will tread lightly until the unknowns become known.”

• “Uncertainty on trade and world markets softening. 2019 will be an okay year, but we’re worried about the future.”

• “It depends on the political climate and sentiment.”

• “2019 will be an okay year, but we don’t know future trade restrictions and policies. Will Wilbur Ross leave as commerce secretary at the end of the year? Who will replace him? What will be their next restriction? What about Mexico and Canada and Section 232? All unknowns.”

• “America continues to grow despite the gridlock on the hill and despite the administration’s trial and error approach to trade.”

• “Prices are stabilizing. Year-end inventory clean-up will be over as we head into the new year.”

• “We are experiencing improved business activities. However, we are still not near our full capacity.”

• “We’re trying to remain optimistic.”

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, 35 percent were manufacturers and 45 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.