SMU Steel Buyers Sentiment Index: Dead Cat Bounce?

SMU’s Future Buyers Sentiment Index, which measures buyers’ feelings about business conditions three to six months in the future, rose to +54. Future sentiment has been in line with early 2021 levels since late June. Back in April and early May, we saw record high Future Sentiment readings (the highest recorded in our 13.5-year history).

Recall that as steel prices peaked last September, Current Sentiment reached an all-time high of +84, while Future Sentiment peaked two months later at +78. The lowest levels over the past decade both occurred in April 2020, at -8 and +10 respectively.

Measured as a three-month moving average, the Current Sentiment 3MMA slipped 3 points to +69.50 last week, a decline of almost 7 points compared to one month prior. Just six weeks ago, the Current Sentiment 3MMA peaked at +77.83, the highest level seen since December 2021.

The Future Sentiment 3MMA declined nearly 4 points this week to +65.50, down almost 8 points from one month prior. Back in May, the Future Sentiment 3MMA reached a record high of +74.67, surpassing the previous record of +73.67 in March 2017.

What SMU Survey Respondents Had to Say

“Demand is still pretty good. Possible issues late 4th quarter.”

“Consumers are scared and have quit spending.”

“Everything is trending back to more the norm price levels. Hoping that we establish higher norms than history has been.”

“We have a lot of new work starting and if we can flip your inventory over quickly, there will be a buying opportunity.”

“Stimulus package spending and energy spending.”

“Demand is slow, everyone is heavy on inventory, and prices are falling rapidly.”

“Lack of people.”

“We all saw the storm clouds coming, and they’re officially here. I just don’t see this market reversing course anytime soon.”

“Too much capacity. Demand beginning to look sketchy.”

“Unstable markets worldwide.”

“Must manage inventories.”

“Everything will be alright.”

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 700 North American companies. Approximately 45 percent of respondents are service centers/distributors, 30 percent are manufacturers, and the remainder 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 Brett Linton, Brett@SteelMarketUpdate.com