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Market Update

The Material Report #010

The deal, the strikes, and the deal again

Two weeks ago this report called the ceasefire the one thing to watch, since it swings aluminum, copper, and diesel all at once. It swung both ways. The late-May framework fell apart, June 7 and 8 brought the worst strikes between Israel and Iran in months, and on June 10 the US hit Iranian targets after a helicopter was shot down, with Iran declaring the Strait of Hormuz closed again. Then it turned. Trump suspended a planned strike and said Thursday that a deal to end the war, including reopening Hormuz, could be signed within days. An Iranian draft circulating this week would reopen the strait within 30 days, lift the US blockade, and ease sanctions.

As of Friday morning it isn't signed, and the signals are mixed. Trump said the terms Iran's media published "have nothing to do with what was agreed" and called the Iranians dishonorable. Iran hasn't formally agreed, Israel says it isn't part of the deal, and US forces shot down two Iranian drones near Hormuz overnight after Iran fired on a passing ship. Oil is treating a deal as likely anyway. Brent has dropped to around $87 a barrel, its lowest since early March, down from about $94 a week ago, even as the government's own summer forecast still assumes the strait stays shut and oil holds above $100. That gap is the bet: the market expects a signature, the official forecast doesn't.

For your costs, the fork looks like this. If the deal signs and the strait reopens, the war premium starts draining out of aluminum, diesel, and freight within weeks, and the pressure behind fuel surcharges eases. If it falls apart again, the last two weeks were the preview, and prices snap back fast. Until there's a signature, I'd plan purchases as if nothing is signed, because nothing is.

Steel: the streak spread

The one market that ignored the whiplash entirely was steel. Nucor raised hot-rolled coil again on June 8, to $1,115 per ton. By SMU's count it has gone up every single week since late January, $365 a ton over that run. SMU's survey this week had all five of its sheet and plate indexes at multi-year highs, up 20~25% since January, with lead times stretching further and mills barely willing to negotiate. Buyers are out shopping for imported coil because the domestic spot market has gotten, in SMU's words, "prohibitively constricted."

What changed since the last issue is that this stopped being a sheet story. Plate is climbing too. Algoma raised coil and plate prices in early June, SSAB's $40 plate increase from last month takes hold for late-June shipments, and plate buyers see no cooldown coming with heavy grades in short supply. Gerdau raised structural products $40~80 per ton for new orders from June 8, the steepest on channels and angles six inches and up. Last issue described the metals splitting into winners and losers. On the steel side, the winners' column got longer: sheet, plate, and structurals are all climbing together.

If you buy steel regularly, none of this argues for waiting on a pullback. The pattern since winter has been that the coil you didn't book last week costs $10 a ton more this week.

Carbide: the turn that didn't hold

I owe you an update on tungsten, because the last issue called it the clearest turn in the market, and China's price promptly turned around. APT, the tungsten feedstock behind carbide tooling, bounced about 15% in three weeks in China. European APT never fell in the first place and is still up around 230% on the year.

The reason matters as much as the bounce. Chinese mines and traders are holding material back, and speculative buying did the rest, while actual demand from tool makers stays cautious. That looks less like the shortage getting worse and more like the people holding the metal deciding not to sell it cheap. The price you pay doesn't much care about the difference.

For tooling invoices, the read is unchanged: Kennametal is still running roughly 35% in combined price increases and tariff surcharges this quarter against last year, and still picking up business from competitors turning away orders. The relief I hoped was starting at the source hasn't reached your invoices, and after this bounce it's further away than it looked two weeks ago.

Freight: cheaper fuel, record flatbed

Diesel finally turned. The national average fell for a fifth straight week to $5.21 a gallon as of June 8, down from the late-May peak of $5.64. Fuel surcharges should ease on a lag, the same way they stepped up.

The catch is that fuel is only part of the freight bill, and the rest of it set a record. Flatbed spot rates, the trucks that haul steel and heavy stock, hit $2.93 a mile in early June, an all-time high after 12 straight weekly increases, and 19 cents above the record from the 2021 freight boom. DAT's analyst pinned it on "incredible demand for anything to do with data centers, nuclear power, diesel generation, natural gas power generation." The same narrow boom showing up in the machine-tool orders is now setting the price of moving your material.

So delivered cost is pulling in two directions, the fuel line easing while the rate for the truck itself climbs, and on heavy stock the truck rate is winning. If diesel keeps falling, it's worth checking that your carriers' fuel surcharges actually come down with it. That lag has a way of only working in one direction.

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Pricing notes

Copper slid to three-week lows around $6.20, then bounced back toward $6.40 on Friday as deal hopes firmed, still well off the May record. Last issue said a record built on everyone stocking up at once usually doesn't hold, and so far it hasn't. The next event is June 30, when Commerce delivers its copper report and the President decides whether to put a tariff on refined copper itself, 15% starting in 2027 and 30% in 2028, on top of the 50% already on copper parts. Brass and bronze (C260, C360) held flat again.

Aluminum pulled back to around $3,500 per tonne from a four-year high of $3,790 on June 2. Read that pullback carefully. It came from the strong dollar and interest-rate worries, not from supply coming back. The Gulf smelters that went down are still down, with the big Abu Dhabi plant expected to take up to a year to fully recover. That makes aluminum the metal with the most war premium to give back if the deal signs, and the most exposed if it doesn't.

Stainless surcharges did jump for June as flagged last issue, and the confirmed numbers came in around $1.03 a pound on 304 and $1.78 on 316, both up about 8% from May. Nickel has since dropped 5~6%, so the July surcharges, which mills publish in late June, should come in lower. If a stainless order can slip from a June to a July surcharge, it's worth asking your service center what the difference would be.

Steel sheet, plate, and structurals are covered up top.

Tariffs: the 10% baseline at the border still expires July 24, and the replacement is taking shape under a different trade law with no cap on how big or how long the new tariffs can be, so the cliff is not relief. A federal trade court ruled the 10% unlawful back in May, but only for the three companies that sued, and everyone else keeps paying while the appeal runs. One thing worth doing now if you import: ask your customs broker what it takes to keep a refund claim alive on your entries. If the courts eventually kill the tariff for good, the money goes back to importers who kept their paperwork in order.

What I'm watching

The biggest date isn't on the economic calendar, it's whether the deal actually gets signed this weekend. After that: June 25 brings the next durable goods report, June 30 the copper tariff decision, and July 1 the next ISM read on input costs. Mills publish July stainless surcharges in late June, the first ones with a real shot at coming in lower.

Two cautions on the headlines in the meantime. April durable goods orders jumped 7.9%, which sounds like a boom until you see aircraft orders rose 166% and did nearly all of it. Strip out transportation and orders rose 1.1%, while business spending on equipment fell, so the boom is still narrow.

The inflation data also caught up with what invoices have been saying since winter. Wholesale prices rose 6.5% over the year through May, the hottest since 2022, and goods prices posted their biggest one-month jump since the government started that record in 2009, with four-fifths of it energy. ISM has input costs rising for a 20th straight month. The Fed meets next week with markets now betting on a possible rate hike late this year instead of cuts, so costlier money on top of costlier material is the squeeze to plan for if the war premium doesn't come out first.

Sources

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If your shop sends out more than 5 RFQs a week to material suppliers, I'm building a tool over at Material Price Book that pulls all the supplier quotes back into a single comparison view. Get in touch if you'd like to take a look.

If your shop sends out more than 5 RFQs a week to material suppliers, I'm building a tool over at Material Price Book that pulls all the supplier quotes back into a single comparison view. Get in touch if you'd like to take a look.

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