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MRC Global is the chemical industry's source for a complete range of PVF products in carbon steel, stainless steel and special alloys.
Andrew R. Lane
President & CEO
Andrew R. Lane has served as our president and chief executive officer since September 2008. He has also served as a director of MRC Global Inc. since September 2008.
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MRC Global InSight
MRC Global's market-focused magazine, InSight, is published bi-annually for our customers and features product lead times, data, market sector information and price trends.
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The last six months in the world of carbon steel pipe have been anything but stable. Section 232 is the cause of this uncertainty, and at the time of publication, there is still no clarity to the conclusion. As discussed in previous issues of InSight, Section 232 is a little used and obscure section of a 1962 trade law that gives the President of the United States broad ranging powers to impose penalties, whether tariffs or quotas, against the importation of steel products due to national security concerns. On March 8, 2018, President Donald Trump did just that by signing a proclamation that imposed a 25% tariff on all steel products imported into the US, whether stainless or carbon. Steel products are defined by the HTS codes that make up raw and semi-finished steel (e.g., slabs, wire, rebar, sheet, plate products and long product, etc.), and all pipe and tube (e.g., OCTG, line pipe, standard pipe, piling, mechanical tubing, etc.).
The President initially exempted Canada, Mexico, the European Union (EU), Brazil, Australia, Argentina and South Korea. These exemptions were originally granted until May 1, 2018, upon the condition that these parties come to agreement on other bilateral trade issues. South Korea was the first to settle with the administration, negotiating a quota based on 70% of the average tonnage of the last three years, retroactive to January 1, 2018. The South Korean agreement creates a supply restriction in the US - for the 12 months ending March 2018, South Korea was responsible for 39% of the welded line pipe imported into the US. Brazil, Argentina and Australia followed suit and settled as well. Brazil agreed to a similar quota system as Korea, 70% of the last three-year average. Argentina negotiated 135% of the last three years. Like South Korea, these quotas will create supply restrictions in the US, affecting seamless availability more than welded.
Canada, Mexico and the EU were granted an extension of the original exemption to June 1, 2018. However, on May 31, 2018 the president rescinded these exemptions, and the 25% tariff went into effect on June 1. Unlike the hard quotas on Brazil, Korea and Argentina, the 25% tariff will allow material to come into the country, but the tariff will directly increase the price paid by our US energy companies.
In addition to the Section 232 turmoil, the American Pipe Producers Association has filed an anti-dumping and countervailing duty suit against six countries, including South Korea, Greece, Turkey, China, India and Canada, for material over 16” in outside diameter. These six countries represent the clear majority of greater than 16” material exported into the US.
As expected, these trade barriers have created a tightening of the market, pushed out lead times and increased pricing. In the October 2017 edition of InSight, we estimated that demand would be high and supply would be tight due to the increase in rig count and very active midstream infrastructure build out. That prediction has come to fruition, enhanced by extreme pricing pressures and supply restrictions propagated by the governmental actions described previously. Price increases have been steep for welded material, as steel has driven up hot rolled coil prices. Seamless supply has caught up with demand, but we are still seeing the steady increase in price due to raw material concerns.
MRC Global continues to invest in inventory as we remain bullish on the market in general. We have increased our on-hand tonnage over the first half of 2018 and have placed significant orders with both US and international players to arrive monthly. We are well-positioned to meet the needs of our customers during this unpredictable time.
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