In March 2024, the ISM Manufacturing Index (PMI) in the United States rose to 50.3, up from 47.8 in February, surpassing market expectations of 48.4. This marked the first expansion in the manufacturing sector after 16 consecutive months of contraction (i.e. a PMI reading above 50 means expansion, while below 50 means contraction). Positive trends were observed in demand, as seen in indicators like the new orders Index (51.4 compared to 49.2 in the previous month) and new export orders Index (unchanged at 51.6 from February), indicating expansion. However, backlogs (at 46.3) remained moderately in contraction. Companies surveyed notably increased their production levels (54.6 vs 48.4). Conversely, employment numbers continued to decrease (47.4 vs 45.9). Additionally, prices continued to rise moderately to 55.8 from 52.5, driven by unstable commodity costs.

In March, the Conference Board Consumer Confidence Index remained almost the same at 104.7 (1985=100), slightly down from the revised 104.8 in February. The Present Situation Index, which reflects consumers’ views on current business and labor market conditions, increased to 151.0 (1985=100) in March compared to 147.6 in February. However, the Expectations Index, which indicates consumers’ short-term outlook on income, business, and labor market conditions, decreased to 73.8 (1985=100) from 76.3 last month. A reading below 80 on the Expectations Index often suggests an upcoming recession.

“Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future,” said Dana M. Peterson, Chief Economist at The Conference Board. “Confidence rose among consumers aged 55 and over but deteriorated for those under 55. Separately, consumers in the $50,000-$99,999 income group reported lower confidence in March, while confidence improved slightly in all other income groups. However, over the last six months, confidence has been moving sideways with no real trend to the upside or downside either by income or age group.”

WTI Oil entered March at $79.090 per barrel. Prices trended upward for the entire month, closing out March at $83.498 per barrel. Israel withdrew more troops from Southern Gaza in a likely response to growing international pressure. Israel and Hamas also restarted peace talks in Egypt, easing tensions that ignited the recent rally in oil prices. Meanwhile, top crude exporter Saudi Arabia raised official selling prices for all crude grades to Asia in May as global supply tightened. In Mexico, a fire struck an offshore platform operated by the country’s national oil company Pemex, killing one contractor and injuring others. Elsewhere, stronger-than-expected US jobs data released on Friday bolstered the demand outlook in the world’s top oil consumer, while investors look forward to the latest inflation readings in the US and China this week.

The online US Oil Rig Count is at 620 which is down 9 compared to last month’s report and down 131 from Mar 31 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 March at $7.911 per pound, continuing its upward trajectory that began in February. By March 12th, Nickel reached its peak for the month at $8.312 per pound. Nickel then began to trend downward until the 27th where it hit $7.446 per pound. Nickel closed out the month at $7.515 per pound. March’s manufacturing PMI gauges in China exceeded expectations, indicating a positive response to stimulus measures from Beijing. Meanwhile, protests in the Philippines, home to more than half of the world’s nickel reserves and the second largest producer, aimed to halt further extraction due to environmental concerns. These protests pose challenges to the government’s plan to identify new mining zones in an effort to tap into the country’s vast nickel reserves, of which only five percent are currently being exploited.

Below is the 90 day Nickel Price Trend (US$ per tonne).

Domestic commodity stainless plate deliveries have bumped out slightly depending on the grade and size, landing in the 7 to 9 week range. Nickel alloy plates moved out to the 7 to 9 week range. Duplex plates bump out, sitting in the 9 to 10 week range. Domestic carbon steel plate mill deliveries are scheduled in the 6 to 9 week range. Keep in mind, some plates will exceed the estimated ranges depending on the mill’s production schedule.

Welded tubing – Currently deliveries for domestically welded stainless tubing are in the 5 to 12 week range, leaning towards the long side. For import tubes, deliveries are anywhere from 18 to 26 weeks. Carbon steel tubing deliveries have lead times ranging anywhere from 6 to 12 weeks when strip is available. Welded nickel alloy tubing ranges from 8 to 14 weeks (up to 42 weeks for imports).

Seamless tubing – Current schedules reflect 10 to 20 weeks or more for carbon steel (24 to 26 weeks for Western European carbon seamless) and 10 to 35 weeks for stainless. Seamless nickel tubing is being offered at the 10 to 14 week delivery window so long as hollows are in stock. If hollows are not readily available, anticipate deliveries of seamless nickel tubing in the 20 to 32 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.  

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.