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PVFMarketReport


Q1 PVF market prices steady, trending higher


(Continued from page 156.)


will be driven initially by higher input costs for the mills. The Australian floods are limiting supplies of coking coa, pushing spot prices even higher. Iron ore prices are steadily rising due to restricted availability from India. Scrap costs continue to escalate. These are vital ingredients of steelmaking. Many steel buyers are expected to be lifting their order volumes in an effort to purchase ahead of the impending price hikes. This should enable the mills to lift their margins on sales. All these factors are like to push the MEPS World Average Carbon Steel Price through the $1,000 US per ton barrier again.” The main input costs for car- bon steel pipe pricing is scrap, ore, other steel raw materials, energy, and labor. We may not see the easing back of prices that occurred in the second half of 2010. Demand has usually been the major factor in steel costs, but Brid- get Freas recently wrote an article with some interesting comments. “It used to be that higher steel prices cam from stronger demand, as supply was rela- tively fixed in the short term. This is no longer so. First, in recent years, steel- makers have increased their ability and willingness to adjust production to meet demand, so supply has played a greater role in determining prices than it has in the past. Second, steel buyers


no price change thru the first quarter of 2011. However, one carbon flange manufacturer is reporting pressure for price increases due to raw material costs and currency rates. Raw forging prices are seeing some upward pres- sure, but not enough to precipitate an increase in pricing during the first quarter. Prices from India, one of the biggest countries that export finished flanges to the United States, are start- ing to creep up and these increases are being held. Lead times: Fill rates are running


80% - 90% or more for fittings and flanges. Deliveries for material not in stock is forecast for 3 - 4 weeks. Non- stock specials are forecast for 6 - 8 weeks. Comments: A market similar to


2010 is expected with government funded projects being a significant factor for construction projects. The continuation of the Bush Tax Rates has given some relief to the uncer- tainty in the market. Large long term privately funded projects will be scarce in that the tax extension is only until the end of 2012. Regulations being issued regarding carbon emis- sions will have negative impacts on the fossil fuel power industry and EPA restrictions on cooling water will also negatively impact the nu- clear industry. There has been no new


stock running 2 - 4 weeks. Comments: One manufacturer re-


ports that the industry has experi- enced a “spike” in demand over the previous 60-90 days due to the energy business. The rig count has climbed to over 1,700 with a new commitment to oil which remains above $90 a barrel. The industry has thus far absorbed the increase, in part because of continued sluggish industrial and commercial demand according to comments from a manufacturer. Forged steel fittings and unions are manufacturer from “special bar quality steel”. The 2010 calendar year has seen a 48% - 50% increase in SBQ prices. The industry is forecasting a forged steel increase during the second quarter of 2011 to cover the raw material increases ex- perienced during 2010. The number of private labeled material with over- seas origins continues to increase in the PVF market. The inability to pass along raw material increases to the in- dustry continues to put great margin pressure on manufacturers. The energy business segment, par-


ticularly the upstream side, remains brisk. The advent of numerous shale natural gas finds and the industry's ability to extract oil from these shale formations has increased production. The continued increased rig count and corresponding $90+ barrel oil has added increased up stream activity. The energy business segment is ex- pected to continue at this pace through the first half of 2011. With a slight GDP increase forecast, the industrial


•THE WHOLESALER® — MARCH 2011


have increased and manufacturers ex- pect price increases in the 2nd or 3rd quarter of 2011.


Bronze and Iron Gate, Globe, and Check Valves


Pricing: Bronze and iron valves


are forecasting increases of 5% - 7% during this first quarter 2011 due to raw material costs. Lead times: Fill rates for Bronze


and Iron valves remains at 70% - 80%. Lead times for Bronze and Iron valves are forecast for 4 - 8 weeks. Comments: Overall demand for


bronze and iron is relatively flat. Raw material costs continue to increase - the bronze ingot has increased greatly and expected to continue.


Cast Steel Gate, Globe, & Check Valves Pricing: Manufacturers fore-


Ô


cast no price change thru the 1st quar- ter 2011. Lead times: Fill rates remain at


70% - 80% with forecast delivery in 4 - 8 weeks. Non-commodity valves are shipping in 16 - 20 weeks. Comments: Raw material costs


are increasing and price increases are expected during the 2nd or 3rd quar- ter 2011.


Forged Steel Gate, Globe, and Check Valves Pricing: Manufacturers indicate


Ô


stable pricing thru the 1st quarter of this year. Lead times: Lead times are run-


ning 6 -8 weeks for forged steel valves with fill rates of 60% - 70% for com- modity valves. Specials are running 14 - 20 weeks. Comments: Raw material costs are


increasing putting some pressure on manufacturers.


Steel Scrap Pricing as reported by steelonthenet.com


and distributors have improved their working capital management, and are able to operate with much smaller in- ventories than in the past. Therefore, short-term supply changes can have a much greater impact on steel prices by creating the impression of a shortage when the supply chain is lean. Given the degree to which higher-cost inven- tories weighed on the earnings of steel mills and steel buyers when prices tanked in late 2008 and early 2009, lean inventories have become de rigeur.” While raw-material costs (par- ticularly iron ore) were important fac- tors in driving up prices during the first half of 2010, the management of pro- duction levels by Steelmakers has played no small part. As demand grows very slowly it is unlikely that we can study past trends looking for price indicators.


Carbon Steel Weld Fittings and Flanges Pricing: Manufacturers forecast


Ô


coal fired power plant built or con- struction initiated in the last two years. Fifty percent of the power con- sumed in the US is generated by coal fired plants. One manufacturer com- ments that demand is the driver for the PVF industry. Politics, EPA regu- lations, “Card Check” are issues that will be determining factors for the markets of 2011. The biggest industry change is increased attention in the power industry, solar and gas turbine plants and the development of the shale oil and gas deposits - these are the growth areas for 2011.


Forged Steel Fittings Pricing: Ô Prices are forecast to


remain stable during the first quarter of 2011. A branch connection increase of 6% was announced last quarter to be- come effective on January 1st. Lead times:Material shipment fill


rates are running 80% - 90% with lead times for commodity material not in


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business segment may show positive signs during the second quarter of 2011. A manufacturer comments that the shift in power to a more conserva- tive House of Representatives will aid business in general. The business sec- tor is especially concerned with new power to regulate emissions possessed by the EPA. The hope is the 112 Con- gress will curtail the EPA's perceived desire to regulate emissions and essen- tially enact a form of “cap and trade” as reported by a manufacturer.


Stainless Steel Gate, Globe, and Check Valves


Pricing:Ô Stainless valve manu-


facturers forecast no change in pricing for gate, globe and check valves thru the first quarter. Lead times: Fill rates for com-


modity valves are 75% - 85%. Lead times for commodity valves not in stock are forecast for 8 - 10 weeks. Non-stock specials are running 16 - 20 week lead times. Comments: Raw material costs


Quarter Turn Valves - Ball and Wafer Pricing: Quarter turn manufac-


turers are forecasting a possible in- crease of 3% - 5%. Sourcing from key suppliers presents a problem for critical components because of in- creased demand. Lead times: Fill rates for quarter


turn valves are running 65% - 75% with lead times forecast for 6 - 8 weeks. Non-commodity specials are running 12 - 16 weeks. Comments:Key supplier backlogs


are high. Increases are expected across the board of not this quarter the next. Customers have had more fast track projects. Competition is high for commodity ball and butterfly valves from India, Korea and China. Supply chain management and inven- tory control are issues in the PVF market. One manufacturer notes that end users continue to migrate to sin- gle source supply contracts for PVF. Large multi-national integrators are gaining market share.


n


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