MECHANICAL CONTRACTING | PRICES MOSTLY STEADY |
Market condition and activity bulletin: Third Quarter 2011
July - Aug - Sept Stainless Steel Pipe
Pricing: Stainless Steel pipe pricing is forecast to increase 1% – 2- 1/2% for the third quarter. Nickel prices are moving up quickly along with the overall stock market. One manufacturer comments, “It will calm down if quarter 2 earnings reports begin to fall flat.” Increases are due to raw material costs, higher nickel and revised surcharge formulas. Lead Times: Delivery lead times
74
remain at 8 – 12 weeks, and fill rates are 20% – 30%. Non-standard material delivery is forecast for 16 – 20 weeks. Comments: Buyers have
previous month’s price as published in the American Metal Market. The natural gas component of the
surcharge for shipments in each monthly period will be based on the previous month’s final settlement price for NYMEX Henry Hub Natural Gas.
Stainless Steel Weld Fittings, 150 and Hi-Pressure Fittings
Pricing: (Weld Fitting 150#) (SS Pressure Fittings) One manufacturer
BY GARY
CARTWRIGHT PIPING &
EQUIPMENT INC.
appears to be relatively firm pricing on the full suite of commodity stainless steel PVF products, despite the recent downward trend of nickel prices. In addition, China’s energy conservation focused Green Project is being aggressively enforced, increasing production costs and lead times. The cancellation of the tax drawback provision for sales of stainless steel scrap in China has essentially increased scrap acquisition costs by 12% and manufacturers
Stainless steel surcharges based on Allegheny distributor published figures
been holding off on inventory purchases with nickel prices dropping during the 2nd quarter. Commodity prices are flat. Large project orders are being placed at negotiated and competitive prices due to relatively slowing demand. It remains to be seen whether
other mills follow Allegheny Ludlum’s new surcharge format. This new alloy surcharge formula recently announced by Allegheny ATI has the potential to change buying patterns and smooth out often-volatile pricing swings. It may take a quarter to rationalize in the market. Allegheny is basing surcharges on the following: as presented by Terry L. Dunlap, president, ATI Allegheny Ludlum on June 28, 2011 and effective with shipments beginning September 4, 2011: The LME nickel average price
calculated on the daily official cast settlement price from the 21st day of month #1 through the 20th day of month #2 will determine the nickel component of the surcharge for shipments in month #3. For raw materials where Platt’s
Metals Week and Ryan’s Notes are used as references to calculate this surcharge, the average of the four most recent weekly prices, published on or before the 23rd day of every month, will be the basis for the surcharge for shipments in the following monthly period. The iron component of the
surcharge for shipments in each monthly period will be based on the
indicates no change for the third quarter now that pipe prices should be down or more stable; however, another manufacturer indicates a 1% – 21/2% increase due to unstable raw materials and limited supplies in the market. The same manufacturer went on to say that if demand slows and global suppliers deliver on back order prices would in fact drop on domestic fittings. Lead Times: Fill rates are running
60% to 80%. Lead times are forecast 4 – 6 weeks for commodity domestic material and 16 – 20 weeks for import material not in stock. Comments: One domestic
manufacturer indicates that there may be a drop in foreign competition later this year, due to the amount of work overseas. Business here is steady, but nothing concrete is on the horizon. Expectations are still high for the balance of this year. Many end users here need to do work; however, they continue to put it off due to the fluctuation in pipe prices. Nickel and commodity prices have dipped unexpectedly, but are on the rise again. Alan Lipp of Merit Brass shared
the following comments: “Asian PVF producers are being challenged by a whole host of increasing cost pressures, including labor shortages / wage increases, particularly in China, where the country’s competitive advantages in labor-intensive manufacturers continues to erode. This is a significant factor in what
there inform us that they are just now seeing only slight relief from the high (pre-tax) levels that had been persistently rising since December. Whether actual producer costs of scrap come more in line with levels that are being anecdotally published remains to be seen. The combination of enhanced, general cost pressures, reluctance (or inability) to maintain traditional inventory levels of raw materials and genuine upticks in real demand are adversely affecting service levels “throughout the global channel.” The current supply situation of stainless steel ANSI flanges is a prime example of this complex challenge.
Stainless Steel Flanges Pricing: Manufacturers indicate
no price change in the third quarter following an increase of approximately 10% in the second quarter. Lead Times: Fill rates are forecast
for 20% – 30% with lead times of 6 – 8 weeks domestic and 8 –12 weeks foreign. Specialty flanges are out 8 – 16 weeks. One manufacturer comments that they have less production capacity due to more project orders. Still seeing shortage in flanges due to some larger suppliers missing deliveries. Comments: Stainless and alloy
flange inventories were depleted much into the first quarter of 2011.
e Continued on p 76
phc august 2011
www.phcnews.com
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