The Material Report #014

What changed in the last two weeks

The people who set your prices just published their plans

Nucor and Kennametal both reported earnings in the last two weeks. Read together, they answer the two questions this report has carried all summer. Was steel's pause a top? Is carbide relief coming soon? Nucor's answer to the first was no. Kennametal did not build lower tungsten costs into its fiscal 2027 plan.

Nucor first. Steel mill shipments reached a record 7.1 million tons, the second straight quarterly record. Adjusted earnings were $4.84 a share. The company expects an even better third quarter, helped by "higher realized prices" across its major steel categories and stable volumes. Management pointed to multi-year reshoring and data center projects as structural demand. That is the company's outlook, not an independent forecast.

Its posted pricing backs that up. The hot-rolled price went up $10 on July 27 and $10 more on August 3, to $1,155 a ton. SMU's market average reached $1,180. Nucor's July pause is over. That does not mean broad distributor list pricing has followed, as the benchmark section below shows. Steel Dynamics shipped a record 3.7 million tons at an average external steel selling price of $1,298. Cleveland-Cliffs reported a $134 million second-quarter net loss but expects about $575 million in third-quarter adjusted EBITDA, up from $286 million in the second quarter.

Kennametal is the more complicated read, and the more important one for anyone who buys tooling. Sales rose 43%, but a favorable timing gap between price increases and higher raw-material costs contributed $252 million to adjusted EBITDA. The record quarter does not, by itself, show a carbide demand boom. For fiscal 2027, Kennametal assumes tungsten stays at its current historically high level. It expects about a $200 million cash draw in the September quarter, largely from higher inventory valuation, and share repurchases remain paused. Management also said it chose which customers to serve and allocated tungsten and processing capacity where returns were highest. It explicitly said the company was not short of tungsten.

That allocation is the point to act on. A smaller shop may experience it as longer lead times, higher minimums, or firm pricing rather than a stock-out notice. Kennametal expects aerospace and defense to be its strongest end market, giving it a clear reason to direct capacity there. If you buy carbide in volume, confirm pricing, lead time, and expected quantities this month.

One correction to my read from two issues ago: I wrote that June's input-cost cooldown was probably the bottom. July's ISM survey says otherwise. Its Prices Index fell for a third straight month, to 71.1, even as the Manufacturing PMI reached 55.6, its highest reading since May 2022. Prices are still rising, just more slowly. Supplier pricing plans are stronger evidence than my early read, which is why they lead this issue.

From our benchmark

Stainless is the test to watch. July surcharges were roughly flat, and the list medians were close but not identical: 304 ended the month at $3.35 a pound, down from $3.39 in the June 22 week, while 316 held near $4.51. August surcharges then fell about $0.075 a pound on 304 and $0.078 on 316. The current week is partial through August 6, and the distributor list prices we track show no clean pass-through yet. The 304 median has been noisy, and 316 is slightly higher. The decrease test has just started. #015 should have the answer.

Steel split instead of rising together. From June 22 through the latest complete week, A36 rose about 4% and A500 tube about 3%. The broad steel median fell about 4%, while 1018 held at $1.63 after its earlier decline. The drop was not broad-based: lower 1018, 1045, and 1144 A311 Class B bar medians pulled the overall number down while A36 and A500 rose. Nucor's posted HRC price resumed rising; the broad list median did not follow.

The 6061 median stayed at $4.84 through the last complete week even as aluminum climbed to about $3,275 a tonne. The partial current week has slipped to $4.72.

Among individual products, the biggest 14-day moves were a roughly 27% increase in 7-inch 1018 cold-finished round bar and a roughly 26% increase in 20-inch 4130 forged round bar.

Pricing notes

Steel plate: Nucor's September order book opened $60 higher, and SSAB raised plate prices $40 on shipments from August 2. If you need September plate, order it now.

Stainless: August surcharges came in lower, at about $0.95 a pound on 304 and $1.74 on 316, down roughly $0.075 and $0.078 from July. Ask for the August number before booking anything sizable. Nickel fell this week after a report that Indonesia would raise a major miner's quota, but the government denied granting the extra allocation. The broader supply outlook remains unsettled. More ore would put further downward pressure on nickel and surcharges. No reason to buy ahead here.

Copper set a record near $6.83 a pound. The Democratic Republic of Congo banned copper-concentrate exports this week, and the President has had Commerce's refined-copper tariff report for more than five weeks with no announced decision. Both add supply uncertainty. Brass (C360) follows copper. If you buy either regularly, lock what you need and don't count on the tariff decision making copper cheaper.

Aluminum climbed to about $3,275 a tonne, its highest in six weeks, while LME stocks fell to their lowest level this century. The Abu Dhabi smelter restart is ahead of schedule, but only 89 of 1,262 production cells were back online at the latest update, and full output recovery may take up to a year. Buy the next month or two of expected 6061 usage. But don't lock a long-term price while premiums are this high.

Carbide: covered up top. Kennametal's own plan is the cleanest signal, and it assumes historically high tungsten prices through fiscal 2027.

Diesel and freight: Strait of Hormuz negotiations remain unsettled and Brent is near $83, but diesel prices move with a lag. The national average hit $5.35 this week, up $1.55 from a year ago, so expect the fuel surcharge line on your August freight bills to keep climbing. Flatbed rates came off July's highs but are still up about 40% on the year. One correction from last issue: national steel output did not stay at its April lows. It reached 1.87 million tons in the week ended August 1, up 0.6% from the prior week.

What I'm watching next

• Every Monday: Nucor's HRC letter. Two flat weeks would mean the latest run of increases stalled. Nothing so far points that way.
• September 1: The next ISM read on input costs. A fourth straight slowdown would mean the pressure really is easing, despite my July call.
• September 14~19: IMTS in Chicago. If you're going, watch what the tooling makers say about supply. Their booth staff may tell you things their earnings calls won't.
• September 15~16: The Fed. Three members voted to raise rates in late July, but this morning's jobs report showed payrolls falling by 23,000, with the prior two months revised down by a combined 103,000. That makes a September hike less certain. For financing, budget at today's rate and don't count on cuts.

If your carbide distributor has changed your terms lately, minimums, lead times, or a surcharge letter, email me. One line is plenty. If you're seeing those changes, that may be allocation pressure reaching your tier, and I want to track how fast it spreads.

Wondering whether a material quote is high? Run it through Quote Check, paste the quote, and see where it lands against published distributor pricing for that alloy and size. Free, takes about a minute.

---

---