Before we dive into the numbers, here’s a little lighthearted ASME Code humor for you.
Why did the ASME Code go to therapy?
It needed to vent about all the stress it’s been under!
Now it is time to buckle in because we’re off to the races with the latest industrial manufacturing news and information.
In July, the ISM Manufacturing Index (PMI) was 46.8 percent, a drop of 1.7 percentage points from June’s 48.5 percent. Despite this decline, the overall economy has continued to expand for the 51st month, following a contraction in April 2020. Generally, a Manufacturing PMI® above 42.5 percent over time indicates economic expansion. The New Orders Index was in contraction, at 47.4 percent, down 1.9 percentage points from June’s 49.3 percent. The Production Index for July was 45.9 percent, a decrease of 2.6 percentage points from June’s 48.5 percent. The Prices Index rose to 52.9 percent, an increase of 0.8 percentage points from June’s 52.1 percent. The Backlog of Orders Index remained steady at 41.7 percent, the same as in June. The Employment Index fell to 43.4 percent, down 5.9 percentage points from June’s 49.3 percent.
In July, The Conference Board Consumer Confidence Index increased to 100.3 (1985=100) from a revised 97.8 in June. The Present Situation Index, which reflects consumers’ views on current business and labor market conditions, dropped to 133.6 from 135.3 the previous month. Conversely, the Expectations Index, which measures consumers’ short-term outlook for income, business, and labor market conditions, rose to 78.2 in July, up from 72.8 in June but still under the recession-indicating threshold of 80. The preliminary results were finalized as of July 22, 2024.
“Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future; things that may not improve until next year.”
WTI Oil entered July at $83.380 per barrel, quickly hitting the month high on the 4th at $84.018 per barrel. Pricing trended down the remainder of the month, with a slight tick up on the 31st, closing at $77.910 per barrel. Amid ongoing concerns over potential supply disruptions due to the increasing threat of a broader conflict in the Middle East, tensions escalated early Wednesday. Hamas leader Ismail Haniyeh was assassinated in Tehran, following Israel’s announcement of killing Hezbollah’s top commander in a Beirut airstrike on Tuesday. In response, Iran vowed retaliation, stating that Israel will “pay a heavy price.” Meanwhile, data from the EIA indicated a larger-than-expected draw of 3.43 million barrels in US crude inventories, significantly surpassing market expectations of a 1.6 million barrel draw and marking the fifth consecutive weekly decline.
The online US Oil Rig Count is at 589 which is up 4 compared to last month’s report and down 75 from July 28 of 2023. This key and leading indicator shows the current demand for products used in drilling, completing, producing, and processing hydrocarbons which all of us use every day as fuel sources and finished products.
The number of rigs conducting oil and gas drilling in the United States continues to remain stagnant. This trend reflects the priority of drillers to focus on enhancing shareholder returns rather than expanding production coupled with the current administration’s desire to move away from fossil fuels. Additionally, uncertainty surrounds the economic outlook, leading the industry to remain cautious, especially compared to pre-pandemic times when the rig count showed a slower recovery over the past few years. To provide context, in 2019, 954 rigs were drilling for oil and gas in the U.S., and, in 2014, there were 1609 rigs before oil prices dropped below $20 per barrel at the end of that year.
However, solid oil prices will likely prevent the rig count from decreasing significantly and may even lead to a rebound in 2024. Currently, the West Texas Intermediate benchmark prices have been at around $75 per barrel, which is sufficient for most drillers to be profitable.
Nickel entered June at $7.873 per pound and continued its downward trajectory until the 25th when it hit a monthly low at $7.153 per pound. Late 2020 is the last time we saw nickel pricing in this range. Nickel closed the month at $7.531 per pound. Pricing sharply declined after hitting a nine-month high seen in May, as investment funds liquidated long positions amid a stronger US dollar and weak manufacturing data from China. This drop occurred despite bullish factors such as the European Central Bank’s interest rate cut, a production halt in New Caledonia, and potential permit terminations in Indonesia. Analysts foresee continued difficulties due to market oversupply, predicting that total primary nickel stocks will reach a four-year high in 2024, which will likely prevent significant price recovery for the remainder of the year.
Tariffs have tightened. The White House announced new rules last month that strengthened tariffs on metals routed through Mexico. These rules build upon former President Donald Trump’s 2018 tariffs, which imposed a 25% tax on steel imports and a 10% tax on aluminum imports.
Although Mexico was granted an exemption to the tariffs in 2019, the new rules now require companies shipping steel and aluminum from Mexico to verify their origin. Officials report that 13% of steel and 6% of aluminum imported from Mexico actually originate from outside North America, including China, which produces half of the world’s steel. This announcement follows the Biden administration’s decision earlier this year to raise tariffs on $18 billion worth of Chinese imports, targeting goods such as electric vehicles, solar panels, semiconductors, syringes, and medical gloves.
The announcement coincides with a significant increase in US-China trade over recent decades, with imports exceeding $420 billion last year—up more than 300% since the turn of the century. However, last year’s imports represented a 20% drop from 2022, as tariffs have worked to narrow the trade deficit with China.
Domestic commodity stainless plate deliveries are holding at 5 to 6 weeks. Nickel alloy plates remain unchanged from last month, sitting at 6 to 7 weeks. Duplex plates followed the trend of the other alloys, staying at 6 to 7 weeks. Domestic carbon steel plate mill deliveries are scheduling in the 6 to 9 week range. Keep in mind, some plates will exceed the estimated ranges depending on the mill’s production schedule and slab availability.
Welded tubing – Currently deliveries for domestically welded stainless tubing are in the 10 to 12 week range, leaning towards the long side. For import tubes, deliveries are anywhere from 16 to 30 weeks. Carbon steel tubing deliveries have lead times ranging anywhere from 6 to 8 weeks when strip is available. Welded nickel alloy tubing ranges from 12 to 14 weeks (up to 42 weeks for imports).
Seamless tubing – Current schedules reflect 8 to 26 weeks or more for carbon steel and 3 to 26 weeks for stainless. Seamless nickel tubing is being offered at the 8 to 12 week delivery window so long as hollows are in stock. If hollows are not readily available, anticipate deliveries of seamless nickel tubing in the 40 to 44 week timeframe as most hollows are of foreign melt.
Please don’t hesitate to reach out if you have any questions about the current state of our industry’s material supply chain.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Here’s the current surcharge chart for 304/304LSS, 316/316LSS, 2205, C276, and 625.
Nickel Prices have had an interesting ride over the past two decades with a low of $2.20/lb. in October of 2001 (following September 11 events) and a high of $23.72/lb. in May of 2007. Surcharges trail Nickel prices by approximately two months, so they would have been at their lowest in December of 2001 (304 was $0.0182/lb.) with the peak in July of 2007 (304 was $2.2839/lb.).
The chart below illustrates Nickel price by way of U.S. Dollars per Metric ton.
Here’s the Price Index for Hot Rolled Bars, Plate, and Structural Shapes.
