The ISM Manufacturing Index (PMI) fell to 46 in June 2023, from 46.9 in May. The reading pointed to a faster rate of contraction in the manufacturing sector since May 2020, with companies managing outputs down as softness continues and optimism about the second half of 2023 weakening. “Demand remains weak, production is slowing due to lack of work, and suppliers have capacity. There are signs of more employment reduction actions in the near term”, Timothy Fiore, Chair of the ISM said.
The Consumer Confidence Index increased in June to 109.7 (1985=100), up from 102.5 in May. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose to 155.3 (1985=100) from 148.9 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose to 79.3 (1985=100) from 71.5 in May. Expectations have remained below 80—the level associated with a recession within the next year—every month since February 2022, with the exception of a brief uptick in December 2022. However, June’s reading was just a shade below 80 and up sharply from last month’s print. “Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board.
WTI Oil entered June at $70.200 per barrel. Prices bounced around, peaking at $72.640 per barrel on June 7th and seeing its monthly low of $67.290 per barrel on June 12th. WTI Oil closed the month at $70.640 per barrel. Fresh data showed factory-gate deflation in top crude importer China deepened in June, while consumer prices were unchanged as the post-COVID recovery faltered. In the US, still-strong wage growth and a slight drop in unemployment will likely keep up the Fed to raise interest rates later this month. Meanwhile, energy firms in the US last week added oil and natural gas rigs for the first time in 10 weeks, due to the biggest weekly increase in gas rigs since October 2016, according to energy services firm Baker Hughes Co. Also, the US Administration announced that it plans to purchase about 6 million barrels of oil for the Strategic Petroleum Reserve, with receipts scheduled for October and November 2023.
The online US Oil Rig Count is at 680 which is down 16 compared to last month’s report and down 72 from July 8 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 entered June at $9.609 per pound. By June 16th, prices hit their monthly high of $10.413 per pound. Nickel then began a downward slide for the remainder of the month, hitting a low of $9.007 per pound on the 28th, values not seen since July of 2022. Nickel exited the month at $9.229 per pound. The output also continued to surpass demand, and fears of more tightening from major banks pressured prices. The International Nickel Study Group said the nickel market faces the largest demand-supply surplus in at least a decade amid higher production from Indonesia and the Philippines. Indonesia’s output has already grown to 1.58 million tons in the previous year, accounting for nearly half the worldwide supply.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Molybdenum, a metal mainly used as an alloying agent in stainless steel, has been on a wild ride since the beginning of 2023. On June 20th we saw a 2.16% increase in price. This is the first increase we have seen in Molybdenum pricing since the pinnacle was reached in February. Prices are still 13.98% higher than seen at the beginning of 2023. Even with this slight uptick in pricing, surcharges decrease once again for July (340/304L, 316/316L, 2205) and September (C276 and 625), getting us closer to figures seen in early 2023.
Commodity stainless plate deliveries look to have pulled in slightly to an 11 to 12 week range, along with nickel alloy plates pulling into a 12 to 14 week range. Duplex plates are currently sitting in the 12 to 13 week range. Carbon steel plate mill deliveries continue to reside in the 6 to 10 week delivery range. Keep in mind some duplex and nickel alloy plates will exceed the estimated ranges depending on the mill’s schedule.
Welded tubing – Currently deliveries for domestically welded stainless tubing have been seen in the 10 to 14 week range, whether in small or large quantities (Up to 26 weeks has been seen for import). Carbon steel tubing deliveries have lead times ranging anywhere from 10 to 12 weeks when strip is available. Welded nickel alloy tubing ranges from 18 to 42 weeks.
Seamless tubing – Current schedules reflect 10 to 20 weeks or more for carbon steel (24 to 26 weeks for Western European carbon seamless) and 6 to 35 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.