The ISM Manufacturing Index (PMI) fell for the second straight month to 48.4 in December, following a score of 49 in November. The reading shows further contraction in factory activity, being the biggest decline since the heat of COVID in May 2020. Order backlogs, prices, and deliveries are all showing signs of softening. Demand is also weakening, helping to ease supply chain bottlenecks and moderate inflation. 

Consumer Confidence increased to 108.3 in December following back-to-back monthly declines, now standing at the highest we have seen since April 2022. This could be partly due to the cooling of inflation expectations, decreasing gas prices, and holiday vacation plans. Although, the purchasing of large ticket items such as homes and major appliances are still on the decline.

WTI Oil slowly fell through November and into the beginning of December. Oil entered December at $81.14 per barrel, diving to $71.21 per barrel by the 9th then steadily climbing back to $80.26 per barrel by the end of the month. COVID lockdowns in China appear to be lessening, which could be the cause for the climb in oil prices as we enter the New Year.  

The online US Oil Rig Count is at 772 which is down 12 compared to last month’s report and up 184 from January 7 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 bounced around in December, beginning at $12.47/lb., then racing to $14.19/lb. by the 7th, prices we have not seen since May 2022. By mid-December prices had cooled to $12.28/lb. but then began to rise, closing at $13.56/lb. Prospects of China beginning to reopen due to new COVID guidelines brought an increased demand for nickel. Nickel will remain in high demand as the use of it in EV batteries only increases.

Below is the 90 day Nickel Price Trend (US$ per tonne).

Domestic steel plate mills have had an exciting month. Nucor Corporation announced earlier this week that their new Brandenburg, Kentucky plate mill rolled its first steel plate on Friday, December 30th. Nucor states the mill will have the ability to produce 1.2 million tons annually. In late December, the United Steelworkers signed a four-year labor contract with United States Steel Corporation. This contract will continue through September 1st, 2026.

Commodity stainless and Duplex plate deliveries remain in the 7 to 12 week range, while Nickel alloy plates range from 12 to 26 weeks. Carbon Steel plate mill deliveries reside in the 6 to 10 week delivery range.

Welded tubing – Smaller quantity deliveries remain in the 10 to 16 week range, with larger quantity orders still in the window of 18 to 25 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.