The ISM Manufacturing Index (PMI) registered a 58.7 reading in December, a decline from November’s 61.1. Comments from manufacturers indicate a continued high demand environment constrained by persistent supply chain disruptions, higher commodity prices, and logistics challenges (not to mention COVID related obstacles). Even with this difficult landscape, sentiment remains optimistic about the prospects for continued growth.
Consumer Confidence rose to 115.8 in December from a revised 111.9 in November. The data suggests that consumers remain optimistic about employment prospects and the short-term economy in the face of inflationary pressures and the Omicron variant spreading rapidly. It is anticipated that consumer confidence will remain strong throughout the first quarter of 2022.
While WTI Oil started December at a modest $65.57 per barrel, it leaped above $70 during the second week of the month before eventually ending 2021 at $75.21 per barrel. Influencing the run in the commodity’s price has been the news that global supplies are on track to be less generous than previously thought. OPEC+ is still slated to increase production, yet not enough to offset the measured increase in demand.
The online US Oil Rig Count is at 586 which is up 17 compared to last month’s report and up 235 from December 30 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 started December at $9.04/lb., spent a couple of weeks languishing below the $9.00/lb. threshold, and then reversed course to end 2021 at $9.42/lb. Nickel increased over 20% in value from the start of 2021 to the end, along with the other industrial metals (aluminum, zinc, lead, tin). Tight supplies of raw materials should keep prices near current levels in the near term, with price growth moderating to a degree.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Domestic steel mills did not announce any price increases in the month of December. Read that again. After a full year of increases month over month, they finally paused. Early indications are that carbon steel prices will be under pressure as 2022 progresses.
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. The nickel alloy plate delivery schedules continue to be impacted by the ongoing labor strike at Special Metals in Huntington, WV. Carbon Steel plate mill deliveries continue to remain in the 8 to 12 week delivery range.
Welded tubing – There has been improvement with regard to stainless strip supply, bringing some deliveries down to the 14 to 16 week range, although many are still in the window of 18 to 24 weeks. Carbon steel tubing deliveries have begun to return to a more normal supply situation, with lead times ranging anywhere from 8 to 12 weeks when 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. On occasion, as long as hollows are available, some seamless nickel tubing has been offered at the 10 to 12 week delivery window. If hollows are not readily available, anticipate deliveries of seamless nickel tubing in the 20 to 32 week timeframe.
The metal market is still 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.