SMU Data and Models

SMU HR Price MoMo Index: Fifth Week in Negative Territory

Written by Brett Linton

The Steel Market Update (SMU) Price MoMo Index for hot rolled steel in the United States was negative (indicating lower prices) for the fifth consecutive week. 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 neutral pricing over the next 30 to 60 days.

MoMo was measured at -3.56 percent this week, meaning that the current HRC price is lower 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 +0.44 percent, following a change of +0.43 percent last week. This change indicates that the movement in hot rolled prices is moving slightly upwards, and at the same rate as the previous week.

To get a wider sense of the change in the MoMo Index, we calculate a 3-week average change. The 3-week average change in the MoMo Index is -0.32 percent, following a change of -0.40 percent the week before. This shows that the movement in hot rolled prices is slightly decelerating when viewed over a longer 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. Initially published in our Tuesday evening issue, the SMU HRC price range for this week is $420-$460 per ton with an average price of $440, unchanged from our previous price index the week prior.

Brett Linton

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