Starting the New Year off strong, January’s ISM Manufacturing Index (PMI) registered a 58.7 mark, just under December’s 60.5. As a reminder, a reading in excess of 55 is considered exceptional. Of note in this month’s report are comments that indicate consumer prices and labor costs are on the rise, supporting predictions of higher inflation in the coming months.
January saw Consumer Confidence reverse course a bit, measuring in at 89.3 compared to December’s 87.1. Confidence remains far below pre-pandemic levels, with many Americans still concerned about the coronavirus and it’s weight on jobs and the economy. That said, sentiment exists that the consumer will rally as COVID cases decrease and business conditions improve.
WTI Oil made positive progress in January, rising from $47.62 per barrel up to $52.20 per barrel to round out the month. The value increase has been attributed to higher demand as a result of the winter cold snap in the northern hemisphere. Forecasts for 2021 estimate the average price of WTI Oil to stay slightly above $50 per barrel as mobility of populations will likely increase with vaccine distribution success.
The online US Oil Rig count is at 392 which is up 41 compared to last month’s report and down 398 from February 7 of 2020. This roughly equates to a 50% drop since this time last year with these historic lows. 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.
Starting the New Year at the $7.56/lb. level, Nickel quickly rocketed up to over $8.00/lb. by the 6th of the month and spent most of the balance of January at or above that price – eventually closing at $8.04/lb. At present, only 8 percent of refined nickel demand goes into batteries, while 66 percent goes into stainless steel production. That said, electric vehicle demand and projections continue to buoy nickel prices.
Below is the 90 day Nickel Price Trend (US$ per tonne).
As January ended, the domestic steel plate mills pushed through an $80/ton price increase. It remains to be seen how long this price sticks as the supply side is projected to increase in the second quarter. This may put downward pressure on the currently elevated prices.
Domestic stainless mill deliveries are running from 7 to 8 weeks, while Duplex stainless mill deliveries and Nickel alloy plate deliveries are in the 8 to 10 week range. Carbon Steel plate mill deliveries are still something of a challenge as the market remains in flux. That said, more available tonnage is set to become available in the second quarter, providing a tentative 8 week delivery ex mill.
Tubing deliveries range from 4-8 weeks for stainless steel depending upon stock availability and up to 8-14 weeks for nickel alloys. Carbon steel tubing deliveries are still carrying longer lead times anywhere from 6-16 weeks.
Here’s the current surcharge chart for 304/304LSS, 316/316LSS, 2205, C276 and 625.