MRC Global InSight

Stainless Steel & Alloy Pipe, Fittings & Flanges

Demand for stainless steel and alloy (SS&A) PFF is lagging global production, which increased by 9.5% in Q1 2018 over the same period in 2017 and hit 12.8 million tons of capacity. Chinese production accounts for more than half of this supply. However, China’s production was flat during Q1 2018. Gains in production came from Russia, Brazil, South Korea, South Africa and Indonesia.

Global pricing for SS&A PFF has increased significantly over the last 12 months as costs for commodities like nickel, molybdenum and ferrochrome have increased. The dynamic in the U.S. after the Section 232, Section 301 announcements and anti-dumping suits is causing significant inflation as described in greater detail of our supplementary section in this edition.

Nickel pricing is up approximately 20% year-over-year and is currently trading above $5.50 per pound. Fundamentals exist to maintain current price points as LME nickel inventories have fallen nearly 30% since January 2018, and demand for stainless products has increased in Asia. Environmental concerns in the Philippines has slowed mining activity, and the Chinese government has introduced pollution control measures stalling nickel pig iron production.

Ferrochrome remains stable at $1.40 per pound since a significant increase in cost of 71% in January 2017. Concern exists that a market correction may occur as the Chinese currency weakens and their inventories of both ore and ferrochrome begin to grow.

Molybdenum pricing peaked in March 2018 at $14.20 per pound and subsequently retracted to $12.62 :per pound. This level remains high when compared to January 2016, which was trading at $6.50 per pound. The recent reduction is related to slowness in countries outside of the U.S.

Seamless pipe pricing has increased 25% over the last six months largely due to Section 232 tariffs in the U.S. This is having a direct impact on imported finished goods from Europe and Asia but is also impacting some domestic producers who finish hollows and billet, which are imported. Delivery is ranging from stock to 26 weeks.

Pricing for welded pipe has increased between 25% to 30% since the beginning of this year due to raw material increases along with impact from Section 232 tariffs. Demand for U.S. welded pipe has been flat in the first half of 2018, with pipe manufacturers predicting a flat second half also. Delivery is currently running from stock to 16 weeks. South Korean producers have been impacted by agreed upon steel quotas that are part of Section 232. Demand for this material has been steady with modest growth forecasted in the future. Delivery is currently running three to six months, ex-mill.

Flange pricing has increased as much as 65% over the past year but the previous six months has been relatively stable. As described in our supplementary article in this edition, the Department of Commerce announced an affirmative final determination for anti-dumping and countervailing duties for Indian flange manufacturers. Primary manufacturers received duties ranging from 150% to 401% with the balance of India receiving 24%. The position of Indian imported products in the U.S. market has been adversely affected as a result. However, overall demand has remained steady and supply has not been significantly impacted as initially feared. Delivery is running from stock to three months ex-mill.

Weld fitting prices have remained relatively flat this year. Increases are anticipated based on higher pipe prices and the potential effects of 301 tariffs carrying a 25% tax. Asian producers dominate the production and supply of these fittings to the U.S. market, so a large increase in Chinese material will lift pricing levels. Demand and supply have both been steady. Delivery is running from three to six months, ex-mill.