November saw the ISM Manufacturing Index (PMI) remain healthy, improving to a 61.1 level, slightly above the October reading of 60.8. New orders, production, and employment measures all expanded in November. The overall activity strength is impressive when you consider that record-long raw material delays, high commodity prices, and transportation challenges continue to pose as headwinds.
Consumer Confidence fell to the lowest level in nine months in November, registering a 109.5 reading compared to October’s revised 111.6 mark. Concerns about rising prices and lingering apprehension with regard to the Delta variant weighed down sentiment. Consumer spending has remained strong in spite of the negative pressures, which can be attributable to how Americans view the current labor market. Survey respondents indicated that jobs are plentiful which coincides with government data illustrating multi-decade lows in jobless claims.
WTI Oil spent much of November near $80 per barrel, until it dropped precipitously at the end of the month, falling from $84.05 per barrel at the start of the month to finish at $66.18 per barrel. The culprit for the steep decline is the newly identified Omicron variant of COVID-19. As news of the virus spreading to multiple countries made the rounds, uncertainty began to permeate markets. The final catalyst to depress pricing was the CEO of Moderna expressing the belief that existing vaccines may not perform well against the new variant.
The online US Oil Rig Count is at 569 which is up 25 compared to last month’s report and up 246 from December 4 of 2020 (high of 1609 in October of 2014 before oil pricing dropped below $20 per barrel at the end of that year). This key and leading indicator shows the current demand for products used in drilling, completing, producing, and processing of hydrocarbons which all of us use every day as fuel sources and finished products.
Nickel bounced around a bit in November, but ultimately averaged $9.05/lb., beginning the month at $8.94/lb. before finally settling at $9.03/lb. For 2022, seemingly equal factors are hinting at an increase (EV adoption, environmental concerns) as well as those that portend a decrease (surplus of supply, less pandemic-related disruptions).
Domestic steel mills announced a $50/ton increase into the market in November, marking the thirteenth consecutive month that producing mills have implemented a price increase. At some point, prices have to plateau based upon current supply and demand.
Commodity stainless and Duplex plate deliveries are currently in the 7 to 10 week range, while Nickel alloy plate deliveries are in the 10 to 20 week range. Carbon Steel plate mill deliveries continue to remain in the 8 to 12 week delivery range.
Welded tubing – Allocation and late deliveries of strip remain a drag on welded stainless and nickel tubing deliveries, keeping them in a range from 18 to 24 weeks. Carbon steel tubing deliveries remain mired in their own challenging situation, with allocation stifling the availability of raw material, leaving lead times anywhere from 10 to 18 weeks if strip is available.
Seamless tubing – Current schedules now reflect 8 to 16 weeks for carbon steel and 12 to 18 weeks for stainless. Seamless nickel alloy tubing continues to be hampered by raw material availability as some suppliers have narrowed their quantity of stocked hollows as well as alloys in inventory. As long as hollows are available, anticipate deliveries of seamless nickel tubing in the 14 to 18 week timeframe.
Suffice to say, the metal market is in a tremendous state of uncertainty and price volatility, so please don’t hesitate to reach out if you have any questions.
Here’s the current surcharge chart for 304/304LSS, 316/316LSS, 2205, C276, and 625.