MECHANICAL CONTRACTING e Continued from p 32 | PVF MARKET REPORT |
are running longer. Mills are keeping their inventory levels lower. Reuters reports that the outlook for the steel sector is stable, and "the worst should be behind for the industry" as noted by Andrey Nokolaev of the ratings agency S&P on January 11th. VTB Capital analyst Wiktor Bielski said in a comment reported by Bloomberg that the demand for nickel will rise as much as 7% in the first quarter over the prior three months to a record 390,000 tons on steelmaker usage. Nickel is used to protect stainless steel against corrosion. He went on to say that supply will run short of demand by 15,000 and 20,000 tons in the period, and prices may reach $27,500 a ton in the next few weeks.
Carbon Steel Pipe - Seamless, ERW and Continuous Weld
Pricing: ↑ Manufacturers 34
comment that pricing is up 5% - 8% with a $200 per ton increase in HRC. The driving factor in the price of carbon steel pipe and tube is the cost of coil. Lead Times: Fill rates are running
at 40% - 50% with lead times of 6 - 8 weeks. Increased lead times are being seen on coil for manufacturers. When lead times increase, buyers at the factory are forced to increase purchases to keep inventories full for manufacturing. Comments: The U. S. Department
of Commerce has imposed duties on standard pipe from Turkey that range from the low single digits up to almost 30%. Chinese seamless (1/2" thru 16") now has anti-dumping duties ranging from 49% to 99%, while the CVD (counter veiling duty) is from 14% to 54%. India has had the duties on its standard pipe imports to the U.S. revised with some mills penalized by as much as 87%. The MEPS predict
in an article by the Steel Strip that the
“World Average Carbon Steel Price is forecast to exceed $1,000 US per ton in the third quarter of 2011, [up from] an annual average in 2010 of $733 US per ton and an ‘all-time’ high in 2008 of $1160 US per ton. This sharp rise in steel prices will be driven initially by higher input costs for the mills. The Australian floods are limiting supplies of coking coal — 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
Steel Scrap Pricing as reported by
steelonthenet.com
unlikely that we can study past trends looking for price indicators.
Carbon Steel Weld Fittings and Flanges
Pricing:→Manufacturers forecast
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 pressure, but not enough to
commercial demand according to comments from a manufacturer. Forged steel fittings and unions are manufactured 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 experienced during 2010. The number of private labeled material with overseas origins continues to
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 likely to push the MEPS World Average Carbon Steel Price through the $1,000 US per ton barrier again.” The main input costs for carbon
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 Bridget Freas recently wrote an article with some interesting comments: “It used to be that higher steel prices came from stronger demand, as supply was relatively fixed in the short term. This is no longer so. First, in recent years, steelmakers 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 and distributors have improved their working capital management, and are able to operate with much smaller inventories 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 inventories 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
(particularly iron ore) were important factors in driving up prices during the first half of 2010, the management of production levels by Steelmakers has played no small part. As demand grows very slowly it is
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 starting 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. Tax- rate extensions have given some relief to the uncertainty in the market, but only until the end of 2012. Politics and regulations 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:→Prices are forecast to
remain stable during the first quarter of 2011. A branch connection increase of 6% was announced last quarter to become effective on January 1st. Lead Times: Material shipment fill
rates are running 80% - 90% with lead times for commodity material not in stock running 2 - 4 weeks. Comments: One manufacturer
reports that the industry has experienced 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 close to $90 a barrel. The industry has thus far absorbed the increase, in part because of continued sluggish industrial and
phc march 2011
www.phcnews.com
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