In December, the ISM Manufacturing PMI rose to 49.3 percent, a 0.9 percentage point increase from November’s 48.4 percent. This marked the 56th consecutive month of overall economic expansion, following a single month of contraction in April 2020. (Important data points reference: A Manufacturing PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A Manufacturing PMI above 42.5 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.5 percent, it is generally declining. The distance from 50 percent or 42.5 percent is indicative of the extent of the expansion or decline.).
The Conference Board Consumer Confidence Index dropped by 7 points in December, reaching 104.7 (1985=100). Preliminary results were based on data collected as of December 16, 2024.
“The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component saw the sharpest drop. Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened. Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November.”
The New Orders Index remained in expansion for the second consecutive month after seven months of contraction, climbing to 52.5 percent, up 2.1 percentage points from November’s 50.4 percent.
The Production Index registered 50.3 percent in December, a 3.5 percentage point increase from November’s 46.8 percent, signaling a return to expansion after six months of contraction.
The Prices Index continued to rise, reaching 52.5 percent, an increase of 2.2 percentage points compared to November’s 50.3 percent.
The Backlog of Orders Index improved to 45.9 percent, up 4.1 percentage points from November’s 41.8 percent.
The Employment Index declined to 45.3 percent, 2.8 percentage points lower than November’s 48.1 percent.
The Present Situation Index, reflecting consumers’ views on current business and labor market conditions, declined by 1.2 points to 140.2.
Lastly, the Expectations Index, which gauges consumers’ short-term outlook for income, business, and labor market conditions, plunged 12.6 points to 81.1, hovering just above the 80-point threshold often associated with a potential recession.
The Consumer Price Index (CPI, otherwise known as our “inflation” friend) is currently at 2.7% as of November 2024, up from 2.6% in October 2024. CPI tracks the rate of change in US inflation over time and the following shows the trends over the past 20 years.
WTI Oil began the month at $68.100 per barrel. The monthly low was reached on the 6th at $67.200 per barrel. The remainder of the month pricing increased, closing out 2024 at $71.720 per barrel. The increase in price was supported by predictions of colder weather in Europe and the US, alongside China’s recent economic stimulus efforts designed to drive growth. Measures announced by China included raising government employee wages and increasing funding for ultra-long treasury bonds to encourage investment and consumer spending, boosting optimism in the world’s largest oil importer. Furthermore, a 1.2 million-barrel decline in US crude stockpiles last week contributed to price gains, despite fuel demand reaching a two-year low.
The online US Oil Rig Count is currently reported as 589 which is ?0 compared to last month’s report and ? 33 from December 29 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 but efficiency has increased a lot over the years, as you can see from the chart below. We are now drilling at record production levels. This trend of less rigs however still reflects the priority of drillers to focus on efficiency and enhancing shareholder returns rather than expanding production through capital investments due to the current administration’s desire to move away from fossil fuels. 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, possibly leading to a rebound in 2025 with a new more oil-friendly administration taking office. Currently, the West Texas Intermediate benchmark prices have been at or around $75 per barrel, sufficient for most drillers to be profitable.
Nickel trended down for the majority of December. It entered the month at $7.148 per pound, then hit the monthly high on the 12th at $7.337 per pound, then hit the monthly low one week later at $6.845 per pound. Nickel closed out 2024 at $6.940 per pound. Prices remain near a four-year low due to expectations that the current supply glut will persist into next year. Indonesia, the world’s largest supplier, continued to produce abundant supply in the second half of 2024, driven by a surge in Chinese smelting projects following Indonesia’s 2020 ban on nickel ore exports. By September, Indonesia hosted 44 nickel smelting operations, a significant increase from just four a decade earlier. The oversupply has led Indonesian authorities to consider imposing production quotas on smelters to stabilize prices. Additionally, new technologies adopted by Chinese battery manufacturers, which reduce or eliminate the need for nickel, have further dampened the metal’s outlook.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Tariffs have tightened and will continue to tighten as the Trump administration takes office in 2025. The current White House administration announced new rules a few months ago 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 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 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 plate mill plate (PMP) – See below for mill production lead times, in weeks:
Stainless: 7 to 10 (no change from November)
Duplex: 7 to 10 (no change from November)
Nickel Alloys: 8 to 13 (no change from November)
Carbon steel: 5 to 8 (no change from November)
*Some plate will exceed the estimated ranges depending on the mill’s production schedule and slab availability. *
Welded tubing – See below for mill production lead times, in weeks:
Domestic:
Carbon: 6 to 8
Stainless: 8 to 12
Nickel Alloy: 12 to 14
Import:
Carbon: 14 to 25
Stainless: 16 to 30
Nickel Alloy: 16 to 42
Domestic Seamless tubing – See below for mill production lead times, in weeks:
Carbon: 6 to 26
Stainless: 8 to 26
Nickel Alloy: 8 to 12
*Lead times are accurate if hollows are in stock. If not, lead times can increase to 44 week 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.
