SMU MoMo Index Continues to Indicate Downward Price Direction

MoMo was measured at -4.66 percent this week, meaning that the current hot rolled steel 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 -0.79 percent, following a change of -2.36 percent last week. This indicates that there is a continued downward movement in hot rolled price momentum, and that downward movement is slowing down compared to last week.

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 -1.12 percent, following a change of -1.93 percent the week before. This also shows that the movement in hot rolled price momentum remains negative, and is moving lower at a slightly slower pace compared to the previous week.

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, the latest SMU HRC price range is $580-$630 per ton with an average price of $605, down $5 over the previous week.