MECHANICAL CONTRACTING | PVF MARKET REPORT |
has given some relief to the uneasiness in the market place. Large privately funded projects will be a small percentage of the construction market due to the extension of the tax rates terminating at the end of 2012 and the difficulty in securing financing. Regulations issued or that are in the
process of being issued will have a negative impact on the fossil fuel power industry, nuclear power industry, oil and gas shale projects and deep water drilling for oil. The PVF market is struggling with the current state of instability in the world arena and their effects on the cost of energy. Demand continues to be the driving force for the PVF industry. EPA regulations, the political posturing on a domestic energy policy and increasing concern about the national debt are all issues that affect the volatility of the PVF market. Stephen Letko of Weldbend
quotes: “An increase in the attention to the need for energy development in nuclear, clean coal, solar, gas turbine power plants, shale oil and gas development will be the driving forces during 2011-2012.”
Forged Steel Fittings Pricing: Forged steel fittings are
forecast to increase approximately 8%-10% due to raw material costs. Lead Times: Material shipment fill
rates remain at 80%-90% with lead times for commodity material not in stock running 3-6 weeks. Comments: The forged steel
fitting industry has experienced a “spike” in business resulting from the energy business segment. The increase demand has resulted in slightly longer lead times. Forged steel fittings and unions are manufactured from “special bar quality steel”. The 2010 calendar year saw a 42%-45% increase in SBQ prices. The industry increase, the first since 2008, has been adopted by domestic and import manufacturers alike. The energy business segment
remains brisk with continued emphasis on oil drilling. The rig count has shifted from a majority of natural gas wells to oil exploration. The number of drilling rigs seeking oil has hit a 20-year high in the United States. The focus has moved from natural gas in shale to liquids found in shale formations; Eagle Ford in South Texas and the Bakken in North Dakota. The advent of these oil plays, along with $100 barrel oil, have sparked heightened activity. The oil and gas business overshadows the industrial business segment. The
industrial segment continues to gain ground, but at a subdued rate. Manufacturers continue to view
the government’s fiscal policies and regulations as factors attributing towards the sluggish economy. They are concerned with new power to regulate emissions possessed by the EPA. The manufacturers’ hope is the 2012 Congress will curtail the EPA’s perceived desire to regulate emissions and essentially enact a form of “cap and trade”. If the EPA is not curtailed it will have a large and negative impact on the PVF industry.
Stainless Steel Gate, Globe, and Check Valves
Pricing: Pricing for stainless
steel gate, globe and check valves are up 10% or more due to raw material costs, demand and competition. Lead Times: Fill rates for
commodity valves remain at 75%- 85%. Lead times for commodity valves not in stock are forecast for 8- 10 weeks and non-stock specials 16-20 week lead times. Comments: Very strong growth
opportunities are expected over the next five years for this commodity.
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, and Check Valves
Pricing: Cast steel valve
manufacturers indicate priceing increases of 5%-10% due to raw materials, demand and competition. Lead Times: Fill rates still running
at 70%-80% with forecast delivery in 4-8 weeks. Non-commodity valves are shipping in 16-20 weeks. Comments: Raw material costs,
fuel costs and transportation costs have all increased greatly in the past six months. Available inventory in the market place has decreased.
Forged Steel Gate, Globe, and Check Valves
Pricing: Manufacturer’s pricing
for forged steel valves is up 2%-5% due mostly to raw material costs.
Lead Times: Lead times remain at
6-8 weeks for forged steel valves with fill rates of 50%-60% for commodity valves. Specials are running 8-12 weeks. Comments: Sales for forged steel
valves were up 30% in 2010 over 2009 levels. The first quarter of 2011 has been very strong and is tracking
“An increase in the attention to the need for energy development in nuclear, clean coal, solar, gas turbine power plants, shale oil and gas development will be the driving forces during 2011-2012.”
at 2008 levels, which was a record year for one manufacturers. The most volatile issue in the forged steel valve market is the price pressure from foreign manufacturers. The continuing consolidation of valve manufacturers is still effecting the market. With less manufacturing done in the U.S., most companies have moved to lower cost countries.
Quarter Turn Valves– Ball and Wafer
Pricing: Quarter turn valves are
up 3%-5% with posted price increases in effect this quarter. The material surcharges have been rising over the past six to eight months. However, May is slightly lower. Lead Times: Fill rates for quarter
turn valves are running 60%-70% with lead times forecast for 4-6 weeks. Non-commodity specials continue to run 12-16 weeks with slight improvement. Comments: The Valve
Manufacturers Association released historical data on past valve shipments by product category and total shipments, as well as its annual breakdown of valve shipments by end-user markets. In 2010, automated valves accounted for the biggest share among valve types ($1.2 billion), followed by ball valves ($706 million), and gate, globe and check valves ($567 million). Of the 15 markets tracked by VMA in 2010, Water & Wastewater had the largest share at about 18%, followed by Chemical (17%), Petroleum Production and Petroleum Refining (each at about 12%), and Power Generation (11%). ;
Printed by permission 2011 Piping & Equipment, Inc. Unauthorized reproduction of any portion of this document is forbidden without the written permission of P&E. This report is published as a service to the PVF industry indicating the direction of prices, lead times and market conditions reported by various domestic and import manufacturers as they believe the direction the market is heading each quarter.
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phc june 2011
www.phcnews.com
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