Most tube-intensive industries drop in latest data

Manufacturing Performance

Data from the U.S. Federal Reserve indicates that the durable goods manufacturing output index decreased in December by 0.4% after gaining 1.0% in the prior month. The improvement in November was primarily because of the settlement of the UAW strike.

Most tubing-intensive sectors were negative in December when compared to November performance, but improvements were recorded in motor vehicles and parts (1.6%) and furniture and related products (1.3%). The fabricated metal products and machinery sectors were each down by 1.2%, while electrical equipment and appliances dropped by 2.4% from November.

The December Manufacturing Report On Business®, as published by the Institute for Supply Management® (ISM®), indicated that economic activity declined in the manufacturing sector for the 14th consecutive month.

In the latest report, it was noted that the Purchasing Managers’ Index (PMI®) improved by 0.7% from November to 47.4. The December New Orders Index declined from the November survey by 1.2 percentage points to 47.1. The Production Index returned to a positive reading of 50.3 in December, which was a 1.8-point increase compared to November’s reading of 48.5.

The backlog of orders index improved to 45.3 in December, up by 6 percentage points from November’s 39.3 level despite the fact that production returned to growth while the new orders index contracted further month over month.

Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management®, noted that while the U.S. manufacturing sector remained in contraction, the situation improved compared to November. In addition, movement in indicators like the Customer’s Inventory Index, the Supplier Deliveries Index, and the Manufacturer’s Inventory Index suggested positive future economic activity.

“84% of manufacturing gross domestic product (GDP) contracted in December, up from 65% in November,” Fiore said in a release. “More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45%—a good barometer of overall manufacturing weakness—was 48% in December, compared to 54% in November and 35% in October.”

Tubing-intensive industries reporting contraction in December, in order, were machinery; fabricated metal products; miscellaneous manufacturing; furniture and related products; electrical equipment, appliances, and components; and transportation equipment. For more information, visit www.ismrob.org.

Domestic Pipe, Tube, and Steel Mill News

Nippon Steel and U.S. Steel announced on December 18 that Nippon would acquire U.S. Steel in an all-cash transaction for $55 per share. The transaction is expected to close in 2024 subject to customer reviews and approvals. According to Nippon, in regard to U.S. Steel, it plans to invest in new technology including blast furnace operations, maintain the U.S. Steel name and Pittsburgh headquarters with its 1,000 corporate roles, maintain its manufacturing facilities (allowing U.S. Steel products to be mined, melted, and made in America), honor all collective bargaining agreements, and not shift existing production or American jobs overseas.

Ascent Industries Co. sold its Specialty Pipe & Tube business, which is a leading master distributor for large-diameter, hot-finish seamless carbon steel pipe and tubing. Ascent’s remaining assets within the tubular segment are Bristol Tubular Products and American Stainless Tubing.

Ryerson Holding Corp. acquired Hudson Tool Steel Corp., a supplier of tool steels and high-speed, carbon, and alloy steels.

Shipping and Imports

Preliminary overall pipe and tube shipments in December for the sectors of the market that we cover increased from November by about 6.4% on stronger imports but fell by about 25% from year-ago levels primarily due to a weaker oil and gas sector. December shipment numbers are subject to change as shipment data is finalized. Manufacturing and construction product shipments in December were flat with November but decreased by 9.4% from November on weaker domestic shipments.

In mechanical tubing products, those most closely associated with manufacturing activity, December preliminary shipments were lower from November and from a year ago by 11.9% and 27.3% respectively. Some of this decline is likely because of shipment timing.

Outlook

The U.S. Federal Reserve continues to monitor inflation and other indicators but has not made an interest rate move since July. Consumer spending remains resilient, but some of that spending is being increasingly funded by debt, which could be a problem if the job market stumbles.

Consumer sentiment improved dramatically in December and January, according to a University of Michigan survey, providing optimism for the economy going forward. Weakness in the Chinese economy and geopolitical events are providing economic headwinds, however.

Flat-Rolled Steel

According to data from the SteelBenchmarker, the index for base hot-rolled band prices moved up to 1.37 in December from 1.34 in November. Data suggests that prices have peaked as of the end of January.