SMU Data and Models
SMU HR Price MoMo Index Turns Positive After 5 Month Negative Streak
Written by Brett Linton
January 6, 2016
The Steel Market Update (SMU) Price MoMo Index for hot rolled steel in the United States was positive this week for the first time in 21 weeks. MoMo, a trailing indicator, is measured as a percentage and shows the relation of the current U.S. hot rolled coil (HRC) price movements against the previous 12-week average spot price as recorded by Steel Market Update. A positive MoMo index indicates hot rolled steel prices are increasing, while a negative index indicates a decline in prices.
MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator and is currently pointing toward higher pricing over the next 30 to 60 days.
MoMo was measured at 0.44 percent this week, meaning that the current HRC price is higher than the average price over the last 12 weeks.
The change in MoMo can be a useful indicator in depicting the severity of price movements and evaluating the directional trend for flat rolled steel prices. The week-over-week change in MoMo was +1.97 percent, following a change of +0.96 percent last week. This indicates that the rise in hot rolled prices is gaining speed compared to the previous week.
To get a wider sense of the change in the MoMo Index and eliminate weekly fluctuations, we calculate a 3-week average change. The 3-week average change in the MoMo Index is +1.79 percent, following a change of +2.38 percent the week before. This also shows that the movement in hot rolled prices is increasing, but at a lesser rate than it it was in the previous 3-week period.
The graph below demonstrates the relationship between the SMU hot rolled coil price, the SMU Price MoMo Index, and the three week moving average change in the MoMo Index. As published in our Tuesday evening issue, the SMU HRC price range for this week is $350-$410 per ton with an average price of $380, up $5 per ton from from last week.
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
Apparent steel supply contracts in February
The amount of finished steel that entered the US market in February receded from January’s peak, according to our analysis of Department of Commerce and American Iron and Steel Institute (AISI) data.
SMU Steel Survey: Sentiment Indices dip as buyer optimism softens
SMU’s Buyers’ Sentiment Indices experienced multi-point declines this week, though both remain positive and continue to reflect optimism among steel buyers for their companies' ability to be successful.
SMU Scrap Survey: Current Buyers’ Sentiment flat, Future Sentiment tumbles
SMU's Current Scrap Buyers' Sentiment Index remained flat this month, while the Future Sentiment Index declined.
SMU Survey: Steel mill lead times show diverging trends
Buyers responding to our latest market survey reported that sheet lead times continue to gradually decline from recent highs. Meanwhile, plate lead times increased to levels last seen one year ago.
SMU Survey: Mills unlikely to budge on price, buyers say
Four out of every five steel buyers who responded to our latest market survey say domestic mills are unwilling to negotiate on new order spot pricing. Mills have shown little flexibility on pricing for nearly two months.