MECHANICAL CONTRACTING e Continued from p 74
Stock replenishments were made in the second quarter, coupled with more project orders for international projects, according to one manufacturer. Although, it appears this does not reflect the overall U.S. economy in general, as unemployment is still high and corporate budgets remain tight in many sectors of the PVF market. One manufacturer also comments
that deliveries have become critical due to fast turnaround orders. Nickel has decreased, resulting in cautious purchasing activity, and projects are being forced overseas. Another manufacturer comments that the most volatile issue is maintaining good fill rates within an uncertain demand environment coupled with weak shipping performance levels from several manufacturers and suppliers. There is also a general aversion to risk throughout the channel.
76
Carbon Steel Pipe - Seamless, ERW and Continuous Weld
Pricing: Welded and seamless
pipe is not forecast to change during the third quarter of 2011. Lead Times: Fill rates remain at
75% – 90%, with lead times of 8 – 12 weeks. Comments: There is growing
concern in the carbon steel pipe market over the downturn in the overall economy. Consumer confidence is slipping with falling gas prices acting to stabilize consumers’ assessments somewhat.
Carbon Steel Weld Fittings and Flanges
Pricing: Manufacturers indicate
pricing will remain unchanged through the third quarter. Frequent checking is advised through the third quarter, due to the instability in the world market. Demand and stable costs of raw materials is keeping pricing stable. Prices have risen somewhat for raw forgings; however, the increase has not been significant to precipitate an increase at this time. Lead Times: Fill rates remain at
90% – 100% for fittings and flanges. Deliveries for commodity material not in stock is forecast for 3 – 4 weeks. Non-stock specials are forecast for 6 –8 weeks. Comments: Stephen Letko of
Weldbend shared the following comments: “The 2011 market is expected to see demands similar to that of 2010. Nearly 90% of the major construction projects will be funded in some form either by local, state or federal funding or a
combination of all. There is concern that demand will falter after August due to the erosion of confidence in the economy. Large privately funded projects comprise about 10% of the 2011 construction market, concentrated mainly in the energy sectors, data center projects and rental property. Financing of large privately funded projects has been hindered due to the difficulty in securing financing. Concern as to the future of the
markets for the fossil fuel power industry, nuclear power, oil and gas shale projects and deep water drilling have heightened due to the enormous set of EPA regulations that is about to be released. The most volatile issue facing our
industry is the instability in the world arena, particularly in the Mid- East and the effect on the cost of energy (oil). Demand from the energy related market continues to be the driving force for the PVF industry. The continued threat of pending EPA regulations, political posturing on a domestic energy policy (what policy?) plus the increasing concern over local, state and federal debt are all issues that affect the volatility of the PVF market. The need for energy will increase
the need for developing nuclear, clean coal, gas turbine power plants along with shale oil and gas field development will continue to be the driving forces during the remainder of 2011 and 2012.”
Forged Steel Fittings Pricing:
Forged steel fittings
are forecast to remain stable through the third quarter following a 10% increase during the second quarter due to raw material costs. Lead Times: Commodity material
fill rates are forecast at 80% – 90%, with lead times for commodity material not in stock running 2 – 4 weeks. Comments: Manufacturers have
accommodated a higher demand associated with a somewhat robust energy demand. The increased production has increased fill rates and shortened lead times. Price pressure remains on “special bar quality steel” used to produce forged steel fittings and unions. The pressure is a result of increased demand from the automotive industry. A raw material increase is forecast for August but will not translate into a forged steel increase. The energy business, particularly
the oil patch segment, remains robust with current levels forecast
through the end of the year. The rig count continues to increase with a total of 1,905 during the week ending July 15. Oil exploration continues to dominate the rig count; 1,013 versus 892 for natural gas. Natural gas prices have remained low for the two years due to record production overwhelming demand. Continued high oil prices, in contrast to depressed natural gas prices, facilitate the rig count moving towards oil. The Eagle Ford and Bakken Shale plays continue to gain strength. Bakken has slowed in recent months, with wet weather and flooding preventing activity. These areas will continue to grow with increased end user activity accompanied by increased distributor locations. The industrial business continues to lag behind energy. We have viewed a slight increase; yet too early to determine staying power. One manufacturer comments that
we continue to view the government’s fiscal policies and regulations as factors attributing towards the sluggish economy. The current administration has yet to adopt a comprehensive energy policy with uncertainty rampant industry- wide. The industry has two issues pending which could reduce energy exploration: West Texas Sand Lizard and hydraulic fracturing under legislative pressure. If the Sand Lizard is placed on the endangered species list, West Texas oil and gas production will drastically be reduced. Hydraulic fracturing is being questioned by many states, potentially leading to reduced production.
Stainless Steel Gate, Globe, and Check Valves
Pricing: Pricing for stainless
steel gate, globe and check valves is not forecast to change thru the third quarter, following a 2% – 7% increase in the second quarter. Lead Times: Fill rates for
commodity valves is running at 75% – 85%. Lead times for commodity valves not in stock are forecast at 6 – 10 weeks and non-stock specials with lead times of 16 –20 weeks. Comments: There is an increase in
market spending in the industrial sector while the commercial sector remains slow.
Bronze and Iron Gate, Globe, and Check Valves
Pricing: Bronze and iron valves
are not forecast to change during the third quarter. This follows second
e Continued on p 78
phc august 2011
www.phcnews.com
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