The ISM Manufacturing Index (PMI) fell to 47.4 in January, the lowest seen since May 2020. This is the third consecutive contraction in factory activity, for what is assumed to be companies trying to better match the slowed demand for the first and second quarters of 2023 and prepare for growth in the third and fourth quarters. Companies are indicating they are hopeful for the second half of the year and will not be participating in large layoffs. It will be interesting to see how the ending of China’s “Zero-COVID” will affect the global economy.
The Conference Board Consumer Confidence Index decreased to 107.1 in January. This remains above the lowest levels we saw in 2022 which was in July. Consumers are expressing their less than upbeat short-term outlook for jobs. They do expect their incomes to remain relatively stable in the months ahead. Purchases of automobiles and appliances hold steady, but fewer consumers plan to buy a home. Interest rates rose slightly in February pushing towards the highest seen since 2007.
WTI Oil has jumped around through January. Oil entered January at $77.120 per barrel. It quickly reached the month’s low at $73.100 per barrel then climbed to $81.640 per barrel by the 20th. Prices began to slowly fall again and ended the month at $78.870 per barrel. Oil still seems to be trending down after the highs experienced in early to mid 2022. There is still uncertainty about the impact of China’s economic reopening and latest sanction on Russian supply.
The online US Oil Rig Count is at 759 which is down 13 compared to last month’s report and up 146 from February 4 of 2022 (a 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 began January at $13.556 per pound, dropping to $12.013 per pound by the middle of the month. It closed the month at $13.677 per pound, barely surpassing where it began. A couple of items to keep your eye on, the Philippines (the second-largest nickel producer) may tax nickel exports which could cause supply uncertainty. On the other hand, Xiang Guangda’s Tsingshan Holding Group (one of the world’s leading producers) is looking to boost production in China, potentially doubling the country’s stockpile of refined nickel this year.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Molybdenum, a metal mainly used as an alloying agent in stainless steel, has reached highs not seen since 2008. It has increased 93.55% since the beginning of 2023. This has resulted in increased surcharges for all alloys using it in any quantity. Note, Ward has begun documenting two additional months of surcharges for C276 and 625 alloys due to the rapid increase we are seeing. C276 can be seen to have a surcharge increase of 21.67% from March to April.
Commodity stainless and Duplex plate deliveries look to be in the 12 to 15 week range, while Nickel alloy plates range from 14 to 20 weeks. Carbon Steel plate mill deliveries reside in the 6 to 10 week delivery range.
Welded tubing –Smaller quantity deliveries remain in the 8 to 13 week range, with larger quantity orders still in the window of 18 to 24 weeks. Carbon steel tubing deliveries have lead times ranging anywhere from 8 to 14 weeks when strip is available. Welded nickel alloy tubing ranges from 18 to 24 weeks, with some cases of 30 week deliveries.
Seamless tubing – Current schedules reflect 10 to 20 weeks or more for carbon steel (24 to 26 weeks for Western European carbon seamless) and 8 to 30 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 20 to 32 week timeframe.
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.