The Material Report #007

What the Mills Actually Said This Week.

I've been writing about steel going up since February. The Q1 earnings calls this week explain why it isn't stopping.

Nucor reported Tuesday. They shipped 7.0 million tons of steel last quarter, the most in their company's history. EPS came in at $3.23, beating analyst expectations by about 40 cents. Their backlog is up 20% from year-end. CEO Leon Topalian told analysts his nonresidential customers are "busier than anything I've seen in 30 years." The streak that I said was slowing in #006 is still going. Nucor raised weekly hot-rolled to $1,055 on April 20 and $1,065 on April 27. SMU's April 28 print has HRC at $1,070/ton (highest since May 2023) and plate at $1,215/ton (highest since April 2024). Plate lead times are 7.4 weeks, the longest in 4.5 years.

Steel Dynamics also hit record shipments. CFO Theresa Wagler said on the call that HRC is now "over $1,000," and that fixed-price contracts that reset April 1 went up significantly on roughly 1.5 million annualized tons. Cleveland-Cliffs lost money in Q1 on a one-time cold-weather energy hit, but management told analysts they'll be back to profit in Q2 and said pricing realization is now lagging the spot index by about two months instead of one. The price increases you saw in February and March are still working their way through their order book.

The cooling I described two weeks ago was a spot-market story. The mill posture didn't change. They're sold out and they know it.

Sandvik Confirmed the Carbide Pre-Buy

Sandvik reported on April 22. Their Machining segment booked 28% organic order growth in Q1. Their tungsten powder business saw orders more than double. Management said the cutting tools growth was partly from customer pre-buying, and the powder business doubling came directly from the surge in tungsten prices.

For two issues now I've been writing that distributors and shops are stockpiling carbide ahead of May 1. Sandvik just confirmed it on a public earnings call. If you haven't placed your reorder, you're behind a meaningful chunk of the market. The actual May 1 list-price percentages from Sandvik Coromant and Kennametal are still in distributor portals as of this morning. APT (the tungsten precursor that drives carbide cost) has come off its peak but European prices are still up roughly 230% since January.

Prices Since Last Issue

Steel is covered above. Nucor's first plate fuel surcharge program also kicks in May 1, at $10/ton or higher depending on diesel.

Aluminum pulled back a bit. LME hit roughly $3,670/tonne on April 16 and faded to $3,475~$3,550/tonne by month-end. Midwest Premium is holding near $1.00/lb. Constellium's Q1 came in well ahead of expectations, with management citing North American auto rolled-product shortages. Norsk Hydro reported their Qatar joint venture smelter is running 40% curtailed on the Middle East conflict.

Stainless: LME nickel hit a 23-month high around $19,450/tonne, up roughly 7% from where it was in #006. May surcharges came in essentially flat month-over-month (304 around $0.96/lb, 316 around $1.64/lb), but the base-price action NAS announced April 6 is still working through. ATI raised full-year guidance and reported a record $4.1 billion order backlog, mostly in their aerospace and specialty business.

Copper round-tripped through a record. Hit $6.12/lb on April 22, then faded back to $5.89~$5.95 by month-end. Net change is roughly flat on the window.

What Welders Are Telling Us About Demand

Lincoln Electric reported Wednesday. They make the welders sitting in most fab shops, so their customer mix overlaps heavily with CNC. The breakdown of where their growth is coming from is useful:

• General fabrication: up high-30s percent
• Heavy industries (ag, mining, construction equipment): up mid-single digits
• Transportation (trailers, trucks, rail): down high-teens percent
• Non-residential structural steel: down high-teens percent

If your shop makes parts for general fab or industrial equipment, that matches what you're probably seeing. If you make parts for trailer or rail OEMs, demand really is soft and it's not just you. Lincoln's automation segment (robotic welding cells) declined mid-single digits, which is worth knowing if you've been quoted a robot lately.

Three Quick Things

Diesel finally dropped. EIA on-highway diesel went from $5.61/gal on April 13 to $5.35 by April 27, a 26-cent move over two weeks. The April 20 print marked the biggest single-week drop since December 2008. Steel is still expensive to ship, but the bleeding stopped. Watch for fuel surcharges to ease in 30~60 days if it holds.

Minnesota Twist Drill is closing. Walter Surface Technologies announced the permanent closure of Minnesota Twist Drill and Triumph Twist Drill on April 15. About 77 employees, founded 1952. The company imported steel blanks from China and exported most of its drill bits to Canada, so it got squeezed on both sides by tariffs. Multiple price increases didn't save it.

About interest rates. Q1 GDP came out today. Headline growth was fine at 2.0%, but inflation came in hotter than expected. The Fed isn't likely to cut this year. If you were waiting for cheaper financing before buying a new machine, that wait probably extends into 2027.

What to Watch

The 10% baseline tariff ruling. Twenty-four states and a couple of small businesses are suing to strike down the 10% tariff on almost everything imported. The judges heard arguments on April 10 and sounded skeptical of the government's case. But analysts now think the court probably won't move fast, because the tariff expires by law on July 24 anyway. So importers are unlikely to get a court win that ends the 10% tariff before it expires on its own.

Lake City strike, entering week five. Workers rejected Olin's revised contract April 27. The Pentagon is reportedly pressing for resolution given drawdowns in small-arms ammunition stockpiles. Olin is bringing in temp workers to keep the line running.

April manufacturing PMI. ISM releases its April reading tomorrow. The S&P Global flash PMI for April hit a four-year high at 54.0, but manufacturing employment contracted for the first time since July. We'll see if the official ISM number confirms.

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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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