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MECHANICAL CONTRACTING PVF Market Report


Market Condition and Activity Bulletin – Fourth Quarter 2011


Stainless Steel Pipe Pricing: Manufacturers indicate


stainless steel pipe pricing is down 1% - 2% thru the end of the year. Nickel continues to slowly decline with mill supply and demand down slightly. Some pricing is negotiable with an order in hand. However, numerous manufacturers are posting notices of price increases for the first of the year notably AK Steel, Allegheny and ThyssenKrupp. Lead Times: Delivery is running 8-12


weeks with fill rates still running at 25% - 30%. Some of the producers are very busy at this time with project work, but competition still seems to be very competitive Comments: The new Alloy Surcharge


54


Mechanism did not do anything to affect the buying pattern as long as prices and surcharges are trending lower. Manufacturers are waiting to see what happens if the economy turns around.


Stainless Steel Weld Fittings, 150 and Hi-Pressure Fittings


Pricing: (Weld Fitting 150#) (SS


Pressure Fittings) One manufacturer indicates no change for the third quarter now that pipe prices should be down or more stable; however, another manufacturer indicate a 1% - 2 ½% 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 -


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 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 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


BY PEGGY BRAHIER PIPING AND EQUIPMENT


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.


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 and 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


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


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. 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


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 private funded projects has been hindered due to the


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phc december 2011 www.phcnews.com


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