SMU Data and Models
SMU MoMo Index Turns Negative
Written by Brett Linton
April 26, 2017
The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States turned negative this week after being in positive territory for the previous eight weeks. 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 -1.32 percent this week, meaning that the current HRC price is now 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 -3.22 percent, following a change of -0.99 percent last week and a change of +1.25 percent two weeks ago. This indicates that there is a downward movement in hot rolled price momentum and that movement has been getting lower over the past two weeks.
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 -0.99 percent, following a change of -0.80 percent the week before. This shows that the movement in hot rolled price momentum remains negative and is at a similar pace to last 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 $600-$650 per ton with an average price of $625, down $20 over the previous week.
Brett Linton
Read more from Brett LintonLatest in SMU Data and Models
SMU survey: Steel mill lead times begin to extend
After stabilizing in our last check of the market, production times for flat-rolled steel have begun to push out further, according to steel buyers responding to SMU's market survey this week.
SMU survey: Buyers say mills less willing to negotiate lower sheet prices
Steel buyers report that mills are less willing to talk price on new sheet orders than they were in weeks past, according to our most recent survey data. In contrast, mills’ willingness to negotiate on plate products remains relatively high, now at the second-highest rate of the year.
SMU survey: Steel Buyers’ Sentiment slips to 16-month low
SMU’s Current Steel Buyers’ Sentiment Index fell further week, now at the lowest reading recorded since October 2022
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.