SMU Data and Models
SMU MoMo Index Continues to Trek Back Into Positive Territory
Written by Brett Linton
March 15, 2017
The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained in positive territory for the third consecutive week after briefly dipping into negative territory three weeks ago. 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 Higher indicating that steel prices are expected to rise over the next 30 days.
MoMo was measured at +3.96 percent this week, meaning that the current HRC price is higher 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 +0.92 percent, following a change of +1.00 percent last week. This indicates that there is an upward movement in hot rolled price momentum, and the rate of that movement is similar 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 +1.53 percent, following a change of +0.69 percent the week before and a +0.05 percent change two weeks ago. This shows that the movement in hot rolled price momentum is positive and continues to increase.
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 $630-$660 per ton with an average price of $645, up $10 over the previous week.
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
February imports ease from seven-month high
After reaching a seven-month high in January, steel imports fell back 3% in February, according to preliminary Census data released earlier this week.
HR vs CR price gap continues to increase
The dollar premium cold-rolled coil (CRC) carries over hot-rolled coil (HRC) continues to expand according to our latest scope of the market.
Manufacturing indicators hold stable since start of year
Data on US industrial production, capacity utilization, new orders, and inventories remained overall steady and strong through January and February figures, indicating a healthy manufacturing sector. The strength of the manufacturing economy has a direct bearing on the health of the steel industry.
March energy market update
In this Premium analysis we cover North American oil and natural gas prices, drilling rig activity, and crude oil stock levels.
SMU Steel Demand Index recovers to a four-month high
Steel Market Update’s Steel Demand Index recovered out of contraction territory on the heels of the pricing blitz from mills last week, according to our latest survey data.