SMU Price Momentum Indicator Adjusted to Neutral (and No the Sky is Not Falling)

Over the past week Steel Market Update has been of the opinion that flat rolled steel prices may be reaching levels where a “pause” may be appropriate. Our SMU Price Momentum Indicator has been pointing toward Higher flat rolled steel prices since December 11, 2015 (6 months).

Many of the reasons which caused Steel Market Update to move our Indicator to Higher still exist today and, in some cases, have actually been strengthened since December of last year. A good example is the trade cases where we got the US Department of Commerce Final Determination on corrosion resistant steels and the results were even more favorable to the domestic steel mills than the Preliminary Determinations. We are also seeing service center inventories as being “balanced” as opposed to distributors carrying large excesses, mill lead times are extended, mill order books are strong and the mills are being consistent at either not negotiating spot steel prices or being very strategic in their negotiations.