The Spread Between Our 12-Week Moving Average & MoMo Shrinking

MoMo was measured at +0.97 percent this week, meaning that the current HRC price is higher than the average price over the last 12 weeks. This is the lowest reading since November 8, 2016 when MoMo was -3.81 percent and momentum is failing as prices come under short term pressure.

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 -0.91 percent, following a change of -2.69 percent last week. This indicates that there continues to be a downward movement in hot rolled price momentum, but that movement is losing speed compared to one week ago.

To get a wider sense of the change in the MoMo Index and eliminate weekly fluctuations, we take an average of the MoMo changes over the past three weeks, a three week moving average (3WMA). The 3WMA change in the MoMo Index is -2.40 percent, following a change of -2.59 percent the week. This also shows that there is a downward movement in hot rolled price momentum. This is the seventh negative 3WMA movement in a row, and we had previously not seen a negative 3WMA since October 18, 2016.

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. Click here to view and interact with it on our website. As published in our Tuesday evening newsletter and revised in our Thursday issue, the latest SMU HRC price range is $590-$630 per ton with an average price of $610, unchanged over the previous week.