Steel Products
SMU Steel Buyers Sentiment Hits All-Time High
Written by Michael Cowden
June 13, 2021
SMU’s steel buyers’ sentiment index has hit its highest point ever – surpassing even the euphoria ahead of the unveiling of Section 232 tariffs and quotas in the first quarter of 2018. Stratospheric price gains, the potential for Section 232 to be removed from the EU by December, and a raft of new capacity coming online in North America has done nothing to dampen the post-pandemic cheer. While inflation fears are percolating through some corners of the market, most steel buyers remain convinced that unprecedented market strength in the first half of 2021 will continue into the second half. Could sentiment breach +80 if an infrastructure bill – decades overdue – actually happens?
SMU asks steel buyers every two weeks how they view their company’s chances for success in the current environment and how they view their prospects three to six months in the future. SMU’s Current Buyers Sentiment Index stands +79 this week, up from +72 two weeks ago and narrowly besting the previous high of +78 in mid-January 2018. SMU’s Future Sentiment Index jumped to +69, up from +63 two weeks ago and marking the highest point since +77 in early February 2018. Both indices have been in the +60s and +70s for most of the year–a massive recovery from the negative territory charted in the second quarter of 2020 following the outbreak of the COVID-19 pandemic.
Measured as a three-month moving average (3MMA) to smooth out the variability, Current Sentiment stood at +72 this week, up from +71 two weeks ago. The Future Sentiment 3MMA was at +65, up slightly from +64 in the last survey.
What Respondents Are Saying
“It is looking more and more likely that the 2H will be special too. You can see folks starting to wake up out of their COVID slumber and looking to spend money.”
“Labor is the biggest constraint we have right now!”
“After the last few years, this is exactly what the service center sector needed. Now I just hope folks are smart and are putting ‘hay in the barn’ and taking care of their key people..”
“I think inflation will become a much bigger headline by the end of July when consumers see how much things have gone up for consumer goods from food to autos. They are going to spend their money on travel and recreation this summer.”
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 run from +10 to +100. A positive reading means the meter on the right-hand side of our home page will fall in the green area indicating optimistic sentiment. Negative readings run from -10 to -100. They result in the meter on our homepage trending into the red, indicating 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. Sentiment is measured via Steel Market Update surveys that are conducted twice per month. We display the meter on our home page for all to see.
We currently send invitations to participate in our survey to more than 600 North American companies. Our normal response rate is 100-150 companies. Approximately 40 percent are manufacturers, 45 percent are service centers/distributors, and 15 percent are steel mills, trading companies or 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.
By Michael Cowden, Michael@SteelMarketUpdate.com
Michael Cowden
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