The ISM Manufacturing Index (PMI) stayed steady in August, coming in at 52.8, the exact same as July. This marks the 27th consecutive month of growth. Of note this month are comments that supplier deliveries are showing some improvement, commodity prices are continuing to soften, and order backlogs are still growing.
Consumer Confidence rebounded in August, registering a 103.2 mark relative to July’s 95.7 reading. Much of the credit for improved consumer sentiment is attributed to falling gas prices. The conditions for the balance of the year are unpredictable, as higher interest rates and inflation continue to present limits on spending.
WTI Oil hovered in a relatively narrow price band in August, starting at $93.89/barrel and settling at $89.55 per barrel. With renewed restrictions being implemented to curtail COVID spread in China, worry that these measures might impact the global economy bled over to the price of oil. This, combined with increases on the supply side, has analysts forecasting prices averaging in the current $90 per barrel range for the next couple of months.
The online US Oil Rig Count is at 760 which is down 7 compared to last month’s report and up 263 from September 3 of 2021 (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 activity was largely uneventful in August, with an average value of $9.98/lb. The commodity started the month at $10.73/lb. yet spent most days below the $10/lb. threshold, ultimately closing the month at $9.69/lb. The stainless steel production outlook is somewhat cloudy for the balance of 2022, which should keep values in the $10/lb. range or perhaps slightly lower.
Below is the 90 day Nickel Price Trend (US$ per tonne).
Domestic steel mills stayed mum in August, with no increase or decrease. Barring some unforeseen events, look for prices to stay stable in the near term as supply and demand approach equilibrium.
Commodity stainless and Duplex plate deliveries remain in the 8 to 12 week range, while Nickel alloy plates range from 11 to 26 weeks. Carbon Steel plate mill deliveries reside in the 6 to 10 week delivery range.
Welded tubing –Stainless strip supply has plateaued, keeping smaller quantity deliveries 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 12 to 20 weeks when strip is available. Welded nickel alloy tubing ranges from 16 to 26 weeks, with some cases of 30 week deliveries.
Seamless tubing – Current schedules reflect 8 to 22 weeks or more for carbon steel (26 to 30 weeks for Western European carbon seamless) and 8 to 30 weeks for stainless. Seamless nickel tubing is being offered at the 10 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.
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.
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. Dollar per Metric ton.