SMU Data and Models
SMU MoMo Index Shows Pace of Higher Prices Slowing
Written by Brett Linton
June 29, 2016
The Steel Market Update (SMU) Price Momentum Index (MoMo) for hot rolled steel in the United States remained positive for the 25th consecutive week, following a 21 week negative streak. MoMo is a trailing indicator and shows the relationship between the current U.S. hot rolled coil price movements against the previous 12-week average price as a percentage. A positive MoMo index indicates hot rolled steel prices are moving in an upward direction compared to the previous 12 week period, while a negative index number indicates a downward direction of prices.
MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator. The SMU Price Momentum Indicator was revised earlier this week to neutral indicating steady prices over the next 30 to 60 days.
MoMo was measured at 5.94 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 -2.28 percent, following a change of -4.75 percent last week. This indicates that the hot rolled price movement is slowing down but at a lesser rate than what we measured last 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 -3.46 percent, following a change of -3.64 percent the week before. This also shows that the movement in hot rolled prices is decelerating and at a similar rate to 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 $605-$650 per ton with an average price of $627.50, up $2.50 per ton from last week.
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
SMU market survey results now available
SMU’s latest steel buyers market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.” Past survey results are also available under that selection. If you need help accessing the survey results, or if […]
SMU Survey: Steel Buyers’ Sentiment Indices rebound
Following months of fluctuations, SMU’s Steel Buyers’ Sentiment Indices rebounded this week, now at multi-month highs. Both of our Indices remain in positive territory and indicate that steel buyers are optimistic about the success of their businesses.
SMU Survey: Mill lead times remain stable and short
Steel buyers participating in our market survey this week reported stable mill lead times for both sheet and plate steel products.
SMU Survey: Most buyers report mills still willing to talk price
Most steel buyers SMU polled this week reported that mills remain willing to negotiate new order pricing.
October service center shipments and inventories report
Flat rolled = 63.4 shipping days of supply Plate = 52.4 shipping days of supply Flat rolled shipments and inventories Flat-rolled steel supply at US service centers remains seasonally high. October inventories increased after edging lower in September – a dynamic driven largely by disappointing demand. October’s report reflects lower demand and stable lead times […]