The ISM Manufacturing Index (PMI) increased to 60.7 in December, a measured increase from November’s 57.5 reading and extending the overall expansion in the economy to the 8th consecutive month. This was the fastest pace of manufacturing expansion in more than 2 years – propelled by an increase in new orders, production, and backlog index. Also contained in the report were comments detailing supply chain constraints, which directly influenced price increases for materials in December.
Continuing the slide that began in November, Consumer Confidence stumbled to a 88.6 mark compared to November’s 96.1. With virus cases rising and new restrictions from state and local authorities, the short term outlook of consumers remains tepid. The December data revealed the lowest overall reading since August and the fewest number of jobs added since the recovery began in May. While there does not seem to be much positive momentum presently, consumers should pick up the pace as the first quarter of 2021 progresses.
December saw WTI Oil improve slightly upon gains made this autumn, rising from $44.55 per barrel up to $48.52 per barrel at month end. Upward mobility of oil prices is currently limited by the slower than anticipated vaccine rollout in combination with the still stagnant demand. If the OPEC production cuts materialize (as theorized), there is talk that this could help push oil back up over $50 per barrel as the pace of vaccinations increases.
The online US Oil Rig count is at 351 which is up 31 compared to last month’s report and down 445 from January 1 of 2020. This roughly equates to a 55% 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.
Nickel ended the month, and the year at the $7.61/lb. level, after starting December at $7.38/lb. As the world continues to recover from the COVID-19 pandemic, the industrial metals sector and electric vehicle makers are set to increase consumption of nickel in 2021, continuing to buoy the commodity. In a related note, domestic stainless steel plate producers announced a $.03/lb. base price increase beginning with shipments in January 2021.
Domestic steel plate mills pushed through $20/ton and $100/ton price increases in December and early January. Demand continues to outpace supply, signaling that these price increases will stick until more capacity comes on line. To that end, it does appear that more supply should hit the market in the second quarter, potentially providing some price relief.
Domestic stainless mill deliveries are running from 6 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 a different story. While material is available in the marketplace through distribution, some mills have closed their bookings temporarily while others are taking a wait and see approach on a per quote basis. Normalcy should return to carbon plate deliveries from mill sources in the second quarter.
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.