SMU Price Momentum Indicator Adjusted to Higher from Neutral

On Friday Steel Market Update (SMU) adjusted our Price Momentum Indicator from Neutral to Higher. With almost all of the major mills now walking in step with one another (at least regarding the direction of prices from here if not the exact rate of change from where they were a couple of weeks ago), we believe prices on cold rolled and coated will move higher over the next 30 days. We also believe hot rolled prices should get a bump as well – whether or not HRC is able to get sustainable momentum will depend on the determination of the mills, how much capacity is being taken out of the marketplace and, how much foreign HRC is being offered into the U.S. market (and at what price level).

Will this change in Momentum be nothing more than a Dead Cat Bounce similar to what we saw earlier this year when prices rose from $445 per ton at the end of April to $470 per ton in early July only to collapse from that point until this past week when we reported HRC at $360 per ton (down $110 from early July)?