SMU Steel Buyers Sentiment Index: Slight Uptick in Optimism

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The Current Sentiment reading of +41 is up nine points from +32 in mid-October, before the flat rolled mills’ first price hike of $40 per ton on Oct. 24-25. However, it remains 20 points below its reading at this time last year. Measured as a 3MMA, Current Sentiment is at +37.33, its lowest reading since January 2016.

Future Sentiment

Buyers also feel slightly more positive about their prospects three to six months in the future. Future Sentiment as a single data point registered +50 in the latest data, up from +38 two weeks ago. The Future Sentiment 3MMA is +42.33, still its lowest since July 2013.

All the current readings are above zero and on the optimistic half of SMU’s scale, therefore more positive than negative from a historical perspective. But they remain well below the typical readings in the +60s and +70s seen over the last several years. 

Steel buyers sentiment has clearly been trending downhill since 2017, as shown by the chart below tracking the annual rate of change in the three-month moving averages.

What Respondents Had to Say

“Our order intake is strong.” Steel Mill

“The fundamentals remain unchanged. The artificial Section 232 tariffs are hurting our manufacturing and favoring some steel producers over others. Slab converters and rerollers using imported raw materials are facing higher costs, driving up the cost for their manufacturing base of customers.” Trading Company

“Demand has really slowed down for the agriculture side of our business, as well as the steel portion. We’re more and more concerned as demand slows more than usual this time of year. We typically see an uptick in middle of the fourth quarter.” Manufacturer/OEM

“I see the situation not changing much in the next six months.” Trading Company

“We see nothing on the horizon to be excited about.” 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 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 500 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 44 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.