SMU MoMo Index Starting to Falter

The Steel Market Update Price MoMo Index for flat rolled steel in the U.S was positive this week for the 7th week in a row after being in negative territory for the prior 10 weeks. However, the Index dropped 2.06 percent in one week after dropping 0.54 percent the week prior. MoMo, a trailing indicator, is measured as a percentage and shows the relation of the current hot rolled coil (HRC) price movements against the previous 12-week average spot price as recorded by Steel Market Update. MoMo was measured at 2.92 percent this week, meaning that the current HRC price is higher than the average price over the previous 12 weeks.

The change in MoMo can be a useful indicator in depicting the severity of price movements and evaluating the directional trend of prices. The week-over-week change in MoMo was -2.06 percent, quite a jump compared to the -0.54 percent change the previous week. Looking at this change on a 3-week moving average, we see that the trend in HRC price fluctuation is now showing a negative direction for HRC prices for the first time in 8 weeks. The 3-week average change in MoMo is -0.49 percent, down from +0.13 last week.