InSight Magazine: April 2021

Stainless Steel & Alloy Pipe, Fittings & Flanges

Stainless steel and alloy pipe, fitting and flange pricing is increasing as raw material costs surge and steel shortages hamper production. Automotive, housing and appliance sales consume the majority of stainless steel in the USA.

Raw material pricing for nickel, molybdenum and ferrochrome are primary factors in the cost of stainless and alloy materials. Nickel pricing has steadily increased since April 2020 ($5.33/lb) peaking in February 2021 at an increase of 58% ($8.42/lb). Some relief is in sight as March 2021 nickel receded to $7.46/lb, a drop of 11%. Warehouse levels were sharply higher at the end of February putting pressure on the price reduction. Molybdenum started to rise sharply in September 2020, then peaked in early March 2021 at $12.75/lb. before dropping to $5.53/lb later in the month. Ferrochrome went through a phase of peaks and troughs through 2020. Beginning with a rise in January 2020, it peaked in May at $0.93/lb. before dropping sharply in July to $0.86/lb. By the end of February 2021, pricing had steadily risen again to $0.98/lb.

These significant changes in raw material costs caused base pricing and surcharges to soar on stainless steel products such as billet, coil and plate, the input materials used to produce finished products like pipe, weld fittings and flanges. Other factors influencing stainless input and finished product pricing include steelmaking capacity, freight and government actions like duties and tariffs, which can restrict supply causing prices to increase and deliveries to extend.

Stainless welded pipe pricing has increased over 25% since mid-Q4 2020. Approximately half of this increase is related to surcharges, which have seen a 21% increase since November 2020. The other half of the increase is related to the restricted supply of coil and plate.

Allegheny Technologies Incorporated (ATI) is one of the few stainless and alloy sheet and coil producers in the USA. On December 2, 2020, ATI announced that they would no longer make 304 and 316 stainless sheet and coil, which covers a very broad range of commodity sizes and walls. This reduction in domestic capacity has not only caused deliveries to extend to 4 to 6 weeks, but also led other producers to implement four base discount changes between December 2020 and March 2021 that amounted to a 27% increase to welded pipe base pricing.

Stainless steel flange manufacturers absorbed the raw input cost increases described above, but government actions have caused pricing for this product to increase dramatically. In February 2021, the Department of Commerce announced that they were reviewing a 2018 case that led to a 140% increase in anti-dumping and countervailing duties for all stainless flanges produced in India. In the original case, two major Indian manufacturers were forced out of the USA market only to be replaced by other producers who are now likely to be removed. This would take significant supplies of finished goods and raw/semi-finished forgings out of the USA market. Based on the agency’s ruling, there could be a retroactive assessment of duties on imports that entered the USA between January 23, 2018 and September 30, 2019, leading to an increase of approximately 18% - 20% for international flanges. This will likely influence domestic pricing.

In March 2021, commodity pricing for weld fittings, forged fittings and seamless pipe was announced. Increases range from 5% to 10% to offset increases in raw material and ocean freight costs. Container costs from Asia to the USA have nearly tripled over the past year due to limited availability in Asia.