In May, ISM Manufacturing Index (PMI) stood at 48.7 percent, a decrease of 0.5 percentage points from April’s 49.2 percent (i.e. a PMI reading above 50 means expansion, while below 50 means contraction). The overall economy has continued expanding for the 49th month following a single month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent generally signifies economic expansion over time.) The New Orders Index remained in contraction at 45.4 percent, which is 3.7 percentage points lower than April’s 49.1 percent. The Production Index for May was 50.2 percent, down 1.1 percentage points from April’s 51.3 percent. The Prices Index dropped to 57 percent, a decline of 3.9 percentage points from April’s 60.9 percent. The Backlog of Orders Index fell to 42.4 percent, 3 percentage points lower than April’s 45.4 percent. Meanwhile, the Employment Index rose to 51.1 percent, an increase of 2.5 percentage points from April’s 48.6 percent.

During May, the Conference Board Consumer Confidence Index increased to 102.0 (1985=100), up from a slightly revised 97.5 in April. The Present Situation Index, which reflects consumers’ views on current business and labor market conditions, rose to 143.1 (1985=100) in May from 140.6 in April. At the same time, the Expectations Index, which measures consumers’ short-term outlook for income, business,and labor market conditions, climbed to 74.6 (1985=100) from 68.8 in the previous month. However, despite this gain, the Expectations Index remained below 80 for the fourth month in a row, a level that typically indicates a forthcoming recession.

“Confidence improved in May after three consecutive months of decline,” said Dana M. Peterson, Chief Economist at The Conference Board. “Consumers’ assessment of current business conditions was slightly less positive than last month. However, the strong labor market continued to bolster consumers’ overall assessment of the present situation. Views of current labor market conditions improved in May, as fewer respondents said jobs were ‘hard to get,’ which outweighed a slight decline in the number who said jobs were ‘plentiful.’ Looking ahead, fewer consumers expected deterioration in future business conditions, job availability, and income, resulting in an increased Expectation Index. Nonetheless, the overall confidence gauge remained within the relatively narrow range it has been hovering in for more than two years.

WTI Oil entered May at $79.000 per barrel. Prices remained pretty constant during the month, closing at $76.990 per barrel. Industry data revealed that US crude inventories surged by 4.052 million barrels last week, in contrast to a 6.49 million barrel decrease the previous week and against market expectations of a 1.9 million barrel draw. US gasoline stocks also rose by over 4 million barrels last week, surpassing market predictions. On Sunday, OPEC+ decided to extend most of their supply cuts until 2025, but allowed for the gradual unwinding of voluntary cuts from eight member countries starting in October. By December, over 500,000 barrels per day are anticipated to re-enter the market, with a total of 1.8 million barrels per day expected to return by June 2025.

The online US Oil Rig Count is at 600 which is down 5 compared to last month’s report and down 96 from June 2 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. This trend reflects the priority of drillers to focus on enhancing shareholder returns rather than expanding production coupled with the current administration’s desire to move away from fossil fuels. Additionally, uncertainty surrounds the economic outlook, leading the industry to remain cautious, especially compared to pre-pandemic times when the rig count showed a slower recovery over the past few years. 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 and may even lead to a rebound in 2024. Currently, the West Texas Intermediate benchmark prices have been at around $75 per barrel, which is sufficient for most drillers to be profitable.

Nickel started May at $8.563 per pound. Pricing stayed level until the middle of the month when it began to climb, hitting a peak of $9.804 per pound on May 20th. Pricing began to slide for the remainder of the month, closing at $8.940 per pound. Riots broke out in New Caledonia, a French overseas territory that contains 20-30% of the world’s nickel reserves, prompting France to declare a minimum 12-day state of emergency on May 15th. This political unrest in a key supplier, along with sanctions on Russian nickel, drove prices above $20,000 per ton for the first time since September 2023. However, the slower-than-expected growth in electric vehicle sales in Q1, which use nickel in lithium-ion batteries, has limited further price increases.

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

Domestic commodity stainless plate deliveries have moved in once again, landing in the 5 to 6 week range. Nickel alloy plates moved in a considerable amount, sitting at in the 6 to 7 week range. Duplex plates followed the trend of the other alloys, bumping into the 6 to 7 week range. Domestic carbon steel plate mill deliveries are scheduling in the 6 to 9 week range. Keep in mind, some plates will exceed the estimated ranges depending on the mill’s production schedule.

Welded tubing – Currently deliveries for domestically welded stainless tubing are in the 10 to 12 week range, leaning towards the long side. For import tubes, deliveries are anywhere from 16 to 30 weeks. Carbon steel tubing deliveries have lead times ranging anywhere from 6 to 8 weeks when strip is available. Welded nickel alloy tubing ranges from 12 to 14 weeks (up to 42 weeks for imports).

Seamless tubing – Current schedules reflect 4 to 26 weeks or more for carbon steel and 3 to 26 weeks for stainless. Seamless nickel tubing is being offered at the 8 to 10 week delivery window so long as hollows are in stock. If hollows are not readily available, anticipate deliveries of seamless nickel tubing in the 40 to 44 week timeframe 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.