Industrial Manufacturing News

#MetalMarketUpdate – October ’20 Newsletter

The ISM Manufacturing Index (PMI) slipped ever so slightly in September, registering a 55.4 versus the 56 recorded in August. With a reading above 50, this marks the fourth consecutive month of growth in the manufacturing sector. Overall sentiment indicates that conditions continue to improve at a measured pace, just not the same pace as conditions declined.  

Consumer Confidence rose sharply in September, to a reading of 101.8 from August’s 86.3 mark. This is the highest mark since the pandemic struck, and the largest one month increase in 17 years. For context, readings before the pandemic were registering at the 130 level. Respondents to the latest survey indicated that they are growing more optimistic about their short term financial outlook and employment prospects.  

September’s movement with WTI Oil was largely uneventful, beginning the month at $42.76 per barrel, dipping to $37 range, and ultimately settling at $40.22 per barrel. Stalling demand for transportation fuels (automotive, air travel) is one of the major contributors to the lagging recovery of oil prices. The longer term sentiment for prices anticipates slow and steady growth, with prices eclipsing $50 per barrel by the second half of 2021.

The online US Oil Rig count is at 266 which is up 12 compared to last month’s report and down 589 from October 4 of 2019. This roughly equates to a 65-70% drop since this time last year with these historic lows. 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.

Nickel had its best month of the year in September, averaging $6.74/lb. That said, the commodity has been losing steam, closing the month at $6.60/lb. after opening September at $7.04/lb. Pricing held up until Tesla’s Battery Day event on September 22nd, at which time Elon Musk revealed that he has abandoned a plan to purchase a mining company – deflating the hope of traders that Tesla would contribute to higher values.

The domestic steel plate mills all announced $50/ton price increases at the end of September, on the same day that Cleveland-Cliffs announced that they have agreed to purchase ArcelorMittal USA. This transaction (if approved) will result in Cleveland-Cliffs becoming the largest flat-rolled steel producer in the U.S.  

Domestic stainless mill deliveries are running from 5 to 7 weeks, while Duplex stainless mill deliveries and Nickel alloy plate deliveries are in the 7 to 9 week range. Carbon steel plate mill deliveries register in the 5 to 10 week range.

Tubing deliveries range from 3-8 weeks for stainless steel depending upon stock availability and up to 8-14 weeks for nickel alloys. Carbon steel tubing deliveries are still carrying longer lead times anywhere from 6-16 weeks.