The Material Report #004

Aluminum Availability, Carbide Costs, and Some Actual Good News

Three weeks ago, Brent crude was at $73. It touched $119 on Wednesday after Israel struck Iran's South Pars gas field. The Strait of Hormuz has been effectively closed since March 2, with tanker traffic down from 150+ daily transits to single digits. You already know this from the news. Here's why it matters for your shop specifically.

The Gulf produces about 9% of global aluminum. Almost all of it ships through Hormuz. Bahrain's Alba, one of the largest smelters in the world, shut down 3 of its production lines on March 15. Qatar's Qatalum is running at roughly 60% capacity. Both have suspended delivery contracts. A full restart of idled smelter lines takes 6~12 months, so even if the conflict ended tomorrow, the supply gap carries well into 2027.

Global aluminum prices peaked at $3,544/tonne earlier this month and are trading in the $3,342~$3,520 range. But that's the international benchmark, not what you're paying. US buyers pay an additional Midwest Premium on top of that, which is above $2,100/ton right now. Add the 50% Section 232 tariff and the all-in delivered cost for primary aluminum lands around $5,500/tonne, or roughly $2.50/lb. That's about 70% more than what international buyers pay.

The bigger concern is availability. One service center source told Steel Market Update: "In 45 days, it won't be a matter of price but who has stock on the ground." If you run aluminum regularly, this is the time to check your supplier's inventory levels and lock in what you can. Waiting for prices to come down may mean waiting for material that isn't there.

Prices Since Last Issue

Steel: Nucor HRC at $1,015/ton as of March 16, up from $1,005 when we last published. The $5/week incremental increases continue. Plate jumped $40~$60/ton on March 12. Lead times are 5~6 weeks spot, 10~12 weeks on plate. No price decreases from any domestic mill.

Stainless: 304 surcharge at $0.9659/lb (up 18.2% since January), 316 at $1.6289/lb (up 21.7% since January). North American Stainless raised its fuel surcharge to 32%. The 316 acceleration is driven by molybdenum and nickel, and if energy costs stay elevated, expect these surcharges to keep climbing.

Copper: Holding steady around $5.83~$5.99/lb. Not much movement since #003, but the 50% tariff on semi-finished products continues to make every copper buy more expensive than it looks on paper.

Brass and bronze: Modest gains early in the month, then a pullback mid-March as copper inventories surged globally. Relatively stable compared to everything else.

Your Carbide Inserts Are About to Get More Expensive Again.

Last issue I mentioned tungsten was something to watch. It's now something to worry about. The global benchmark price for tungsten concentrate is up 557% since China restricted exports under their 2026 export control rules. China controls 79~88% of global tungsten production, and only 15 approved companies can export it. Chinese tungsten exports fell roughly 70% year-over-year.

Every major carbide brand issued increases between December and February. Kennametal, Iscar, Tungaloy-NTK, Kyocera, SGS, Mitsubishi, Harvey, Helical, Micro100. A second wave is coming in May from Iscar, Seco, and Tungaloy-NTK. At the product level, tungsten steel end mills are up 60~70%. CNC indexable inserts are up 25~30%.

There is one positive development. South Korea's Sangdong tungsten mine was formally commissioned on March 17. Operated by Almonty Industries, it could eventually supply around 40% of global tungsten demand outside China. But Phase 2 production isn't expected until 2027, so near-term relief is limited.

In the meantime, scrap carbide is fetching $40~$55/lb depending on grade and buyer. Kennametal and Sandvik are on the higher end. If you're not already saving your worn inserts and broken end mills, start. And if you're seeing regrinding services that can extend tool life at a fraction of new insert cost, that math is getting better every month.

Some Actual Good News

Four issues of rising costs gets exhausting. Here's what's working.

Demand is strong. The manufacturing PMI has been in expansion for three straight months. Backlogs are at their highest since August 2022. Capacity utilization is at 82.4%. Metal fabrication production is projected to grow 5.5% this year. The work is there.

Defense and aerospace are booming. Global military spending hit $2.7 trillion in 2024, up 9.4%. Reliance's subsidiary AMI Metals just won $2.9 billion in government contracts, including border wall steel logistics and F-35 aluminum plate. If your shop has AS9100 certification or does defense work, this is your moment.

Pell Grants for CNC training start July 1. Short-term programs under 15 weeks, including CNC operation and industrial maintenance, will qualify for federal Pell Grant funding this summer. For shops struggling to find machinists, this is the most concrete workforce pipeline development in years.

Ryerson and Olympic Steel closed their merger on February 13. They're now the second-largest North American metals service center. Worthington Steel is also trying to close its acquisition of Kloeckner, with a March 26 deadline. More consolidation means fewer options for small buyers, but it also means those service centers need to move volume. If your contracts allow it, use the transition period to renegotiate pricing while they're integrating.

What to Watch

March manufacturing PMI drops April 1. February was 52.4 with input costs at a 4-year high. The regional manufacturing surveys are splitting. The Philadelphia region rose to 18.1, which is its third straight increase and suggests strong activity in the mid-Atlantic. But the New York region dropped to -0.2, a surprise contraction. Delivery times in the New York survey tripled, which points to logistics problems rather than demand weakness. The national March reading will tell us whether the expansion is holding or starting to crack under the weight of rising costs.

New trade investigations launched March 11~12. The administration opened investigations into 16 economies for manufacturing overcapacity and 60 economies for forced labor. Unlike the emergency tariffs the Supreme Court struck down in February, these Section 301 tariffs have no rate cap and no time limit. This is the replacement path for those tariffs and could result in new permanent duties on imported metals and manufactured goods. Public comments are due April 15, with decisions expected within 12 months.

Carbide tooling price increases hitting in May. Iscar, Seco, and Tungaloy-NTK all have another round of increases scheduled. If you have upcoming jobs with heavy tooling requirements, buying inserts now at pre-increase pricing is worth considering. The tungsten supply situation isn't improving before 2027 at the earliest.

Hormuz resolution timeline. Iran's foreign minister said on March 15 that Iran has not requested a ceasefire or negotiations. The US Navy still hasn't launched escort operations. Energy Secretary Wright said escorts could start by end of March, but even if they do, it would only restore about 10% of pre-war traffic. Plan for elevated energy and aluminum costs through at least Q3.

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Eric Na writes The Material Report, a bi-weekly newsletter on metal pricing trends for machinists and shop owners.

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