Comparison of SMU & CRU Hot Roll Index
Jan / 24 / 2010 - Comparison of SMU & CRU Hot Roll Index
Steel Market Update thought it might be of interest to our readers to do a quick comparison between the CRU hot rolled index widely used within the industry to adjust contract pricing and also the benchmark for settlement of the HR Futures and our SMU hot rolled index. We recently shared our weekly price points with Birmingham Steel Futures who was nice enough to chart the two indexes and then superimpose them on a graph (without giving up confidential information).
It has been our contention, over the past twelve months our HR (as well as CR, Galvanized and Galvalume) indexes tend to lead the market. Another thing we are learning about our index through this graphing exercise is our index does not exaggerate either the peaks or valleys.
Going back to early 1st Quarter 2009 the two indexes appear to be in sync with each other until late May/early June which was the time period when the market stopped falling and reversed course. The market peaked again in mid-September 2009 and began dropping fairly quickly (according to SMU) while CRU has the market gently rolling over during a four week time span.
Our members might recall during the late October/November time frame we warned our readers of the “industry practice” of providing “special deals” for orders to be produced in December, which is a normal slow period for steel mills due to the Holidays. SMU made a conscious decision at that time not to follow those special deals lower but to concentrate our energies on what the average company was paying at that time and not exaggerate the price movements. That effort allowed us to pick up the reversal in pricing early and since that time, according to the graph, SMU has been leading the CRU.
The purpose of our comparison is not to pass dispersions on the CRU hot roll index. When I was actively selling steel for a domestic mill I regularly solicited business based on the CRU index. CRU collects and analyzes their information within parameters which will satisfy the financial community (CME HR Futures market) as well as the steel community. Steel Market Update collects and analyzes information in our own unique way in order to provide our members an edge – the ability to recognize change and react to it quickly.
Steel Market Update provides our readers with a range of pricing in the marketplace (while our index referenced on the chart is but an average of our range). We believe buyers and sellers of flat rolled steel products in North America would all be well served to watch our ranges and pricing trends on a regular basis (our opinion).
Our indexes (or indices if you prefer that term) can be found on our website – www.steelmarketupdate.com – under the Steel Prices tab (login required). This information is available to our members as well as those who are trial members.
If you have any questions, comments or suggestions on this subject or any other please feel free to contact us at info@steelmarketupdate.com
