SMU Fair Value Model has HRC Above Fair Value for 1st Time in 5 Weeks
By Steel Market Update - Mon 11 Jun 2012 08:23:49 CT
Related Keywords: Metals

The SMU Fair Value HRC (hot rolled coil) Model placed spot HRC pricing above Fair Value for the first time in five weeks. With the SMU average spot Hot Rolled Coil indexed pricing falling $10/ton last week while scrap inputs declined by $48-65/ton, the model moved Fair Value back into positive territory by $2/ton. SMU expects some gyrations to the Fair Value Model in the coming weeks as scrap inputs may have some more adjustment left in their numbers as prices continued to weakened toward the end of this past week . At the same time our SMU Price Momentum Indicator is pointing toward lower prices in the next few weeks which could easily push hot rolled coil below Fair Value once again.

As a reminder, the Fair Value HRC Model below came from the SMU acquisition of Steel Reality. The graph below demonstrates the relationship between scraps inputs creating an estimated “Fair Value” for HRC versus the actual spot price.


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