SMU Price Momentum Indicator: Stuck in Neutral But Possibly Slipping

The Steel Market Update (SMU) Price Momentum Indicator has been “stuck” in Neutral for a number of weeks as steel buyers and steel mills wrestle with the direction of flat rolled steel prices going forward. Steel buyers are beginning to say the next move in flat rolled steel prices may well be lower, rather than higher.

A reading of Neutral means there is no clear direction for flat rolled spot pricing out of the domestic steel mills. We moved to a Neutral position on Aug. 5, 2017. Since then, the domestic steel mills announced a $30 per ton increase in mid-August. AK Steel announced a new price increase of $30 per ton on Sept. 6. To date, none of the other mills have followed the AK Steel lead. It is normal procedure for Steel Market Update to take our Price Momentum Indicator to Neutral when announcements are made. However, in the current situation, we actually moved our index from Higher to Neutral prior to the first steel mill round of increases and it has remained at Neutral for five weeks.