SMU Data and Models

SMU Price Momentum Indicator Now at Lower
Written by John Packard
March 31, 2020
Today we took our Price Momentum Indicator on flat rolled steel to Lower from Neutral.
We are clearly seeing an erosion in pricing, which is expected to continue over the near term. The economy is heading into recession. Key indicators are pointing toward a slowdown in construction as states and local municipalities mandate construction projects are “non-essential,” temporarily closing them down.
We already have automotive shut for at least two weeks, and many believe the idling of the auto OEMs could extend as the number of COVID-19 cases increases within their workforce.
The energy markets have been decimated by the drop in the price of oil. An executive with one of the domestic steel mills pointed to the significant drop in the rig count as evidence of the fallout of $20 per barrel oil due to the disagreement between Saudi Arabia and Russia, with U.S. drillers caught in the middle.
End users and service centers are reporting lower price quotes (the few who are actually buying) from the domestic steel mills compared to just two weeks ago.
Because of COVID-19 and the uncertainty surrounding the virus, it is unknown how long and to what depths prices could go. However, the mills have been acting proactively by shutting capacity in a dramatic fashion prior to a wholesale drop in pricing. When speaking to another mill executive today, he calculated that approximately 20 percent of the total flat rolled capacity is in the process of being removed from the market.
Later this week we will announce our latest SMU Steel Buyers Sentiment Index. Looking at the data earlier today, it appears we will report the first negative (below zero) number for Current Sentiment since November 2010….
Plate Price Momentum remains at Neutral pending a more complete analysis of the plate markets.

John Packard
Read more from John PackardLatest in SMU Data and Models

SMU Scrap Survey: Current and Future Sentiment tick down
SMU’s Current Sentiment Index for scrap decreased this month, a move mirrored by our Future Sentiment Index, according to the latest data from our ferrous scrap survey.

SMU Survey: Buyers’ Sentiment slips again, future outlook improves
Each of our Sentiment Indices continues to reflect that steel buyers are positive about their present and future business prospects, though that confidence has eased considerably compared to the beginning of the year.

SMU scrap market survey results now available
SMU’s October ferrous scrap market survey results are now available on our website to all premium members.

SMU flat-rolled market survey results now available
SMU’s latest steel buyers market survey results are now available on our website to all premium members.

SMU Survey: Sheet and plate lead times stabilize
Sheet and plate lead times saw minor shifts this week, according to SMU’s latest market survey. Sheet times have inched up over the last month but remain within days of multi-year lows, as they have since May. Plate lead times have bobbed within a tight range for months, hovering roughly a week longer than this time last year.