SMU Data and Models
SMU MoMo Index Falls Deeper into Negative Territory
Written by Brett Linton
May 24, 2017
The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained negative this week for the fifth consecutive week, following an eight week streak of being in positive territory. 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 in prices.
MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator. The SMU Price Momentum Indicator is currently at Lower indicating that steel prices are expected to remain steady over the next 30 days.
MoMo was measured at -5.87 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 -1.20 percent, following a change of -0.79 percent last week. This indicates that there is a continued downward movement in hot rolled price momentum, and that downward movement is accelerating 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 -1.45 percent, following a change of -1.12 percent the week before. This also shows that the movement in hot rolled price momentum remains negative, and is moving lower at a slightly faster 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 $570-$620 per ton with an average price of $595, down $10 over the previous week.
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
SMU Survey: Buyers’ Sentiment tumbles as caution increases
SMU’s Buyers’ Sentiment Indices resumed their downward trend this week, erasing the modest recovery seen two weeks ago.
Service centers: Mill orders down further in April
SMU’s Mill Order Index (MOI) declined for a second straight month in April after repeated gains at the start of the year, according to our latest service center inventories data.
SMU Survey: Mill lead times edge lower
Sheet and plate lead times declined across the board this week, according to buyers responding to the latest SMU market survey. While our lead time ranges were unchanged compared to mid-April levels, average production times for each steel product we measure have declined from they were two weeks ago.
SMU Survey: Most buyers say price negotiations back on the table
Domestic mills are largely negotiable on spot prices, according to the majority of steel buyers responding to our latest market survey.
SMU Scrap Survey: Current, Future Sentiment Indices log declines
However, in a month plagued by tariff and economic uncertainty, both current and near-term outlooks for our scrap survey respondents remained surprisingly optimistic.