SMU Data and Models

SMU Steel Buyers Sentiment: More Resilient Than Prices

Written by Tim Triplett

February 18, 2022

Despite the fact that steel prices have plunged since last fall, industry sentiment has not fallen nearly as sharply and remains at a highly optimistic level – a positive sign for the first half of the year.

Steel Market Update surveys buyers every two weeks and asks how they view their chances of success in the near and longer term. SMU’s Current Sentiment Index registered +70 this week, up 2 points since early February. Future Sentiment – which measures buyers’ feelings about their prospects three to six months in the future – also inched up 2 points to +66 on the 100-point scale.

Those figures are down from early September when steel prices were at their peak. At that point Current Sentiment was at an all-time high of +84 and Future Sentiment at a near-record +75. Since then, the hot rolled steel price has dropped by about 45%, but sentiment has slipped much more modestly.

Measured as a three-month moving average, the Current Sentiment 3MMA is at +71.50 and the Future Sentiment 3MMA is at 66.67, showing that steel buyers’ attitudes are largely unchanged despite volatile market conditions.

What Respondents Had to Say

“With pricing dropping so rapidly, it will be nice to get back on a level playing field.”

“An $850/t drop in pricing over the course of 4-5 months is no easy feat.”

“Inflation needs to slow down.”

“Q2 and beyond could be poor due to price declines and slowing growth in demand for plate.”

“Q3 could be rocky, but we’re locking in as many downstream contracts as we can right now.”

“Hopefully orders will pick up in Q2’22 so we can resume fulfilling our budget.”

“There are still so many issues. I am concerned about the federal government raising interest rates and stalling future growth.”

Tracking steel buyers’ sentiment is helpful in predicting their future behavior.

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.

We send invitations to participate in our survey to more than 600 North American companies. Our normal response rate is 100-150 companies. Approximately 35 percent are manufacturers, 50 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 Tim Triplett, Tim@SteelMarketUpdate.com

Tim Triplett

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