MRC Global InSight

Valves, Automation, Measurement & Instrumentation

The valve, automation, measurement and instrumentation (VAMI) group of products continues to see modest increases in business activity following significantly reduced demand. The COVID-19 pandemic, on top of already low commodity prices, had a severe impact on valve and automation demand, with manual valve demand falling off immediately and automated valve demand trailing months later. Now, along with this slight increase in demand, pricing is also on the rise following the surge in costs and supply restrictions that the steel industry is experiencing due to significant changes in raw material costs.

The COVID-19 pandemic continues to impact lead times with longer than normal deliveries. High volumes of imports from Asia to the USA are still causing port congestion, nearly doubling factory-to-door delivery times to an average of 9 weeks. We do not anticipate any significant changes to tariffs in the USA valve and automation industry. The Section 301 List 3 tariffs of 25%, that the USA government imposed, and directly impacted Chinese suppliers, remain in place. Always subject to change, the total Chinese tariff is set at 30% for the foreseeable future.

Upstream Production

The demand for upstream VAMI products remains at low levels compared to 2018 and 2019 demand, with only a modest increase due to recent commodity price improvements. The North American rig count remains low at 515 rigs, compared to 903 this time last year.3 In addition to oversupply, oil and gas producers continue to battle heavy debt with lower commodity prices in play.

Midstream Pipeline

Midstream pipeline construction experienced major setbacks in 2020, with capital projects being put on hold in various phases of completion. These projects are beginning to move forward as materials previously held in place are now being shipped to construction locations.

Financially stable transportation companies are moving forward with a limited number of gas pipeline projects as well. MRC Global is working diligently to serve this sector with our new Valve Engineering and Modification Center (VEMC), offering turnkey ball valve modification and automation services. Demand for the VEMC products and services remains constant with lead times for larger projects at 8 to 12 weeks.

Our FastTrackSM valve automation program ships modified automated valves in 2 to 3 weeks. Ball valve and actuator inventories are readily available, including high pressure gas and gas hydraulic operators for large diameter main line valve applications.

Capital projects in the liquid pipeline, tank and terminal valve and automation sector have slowed significantly. Smaller projects continue to demand a variety of double block and bleed plug valves, API 6D expanding gate and API 6D slab gate valves utilizing electric motor operators. MRC Global’s inventory of these valves and motor operators is available for quick delivery to our liquid handling end users.

Gas Utilities

Gas utility company valve and actuator demand has experienced an increase, and there are more demand expectations in sight with the spring and summer construction season coming on quickly. Many gas utility customers have approved the MRC Global VEMC to provide complete modified valve and actuation packages for their projects. The MRC Global inventory of 24" and smaller welded body valves is complete with various end connections from the highest quality manufacturers. Demand for pneumatic and electric actuation is stable with off-the-shelf components in supply and ready for service.

Downstream & Industrial

Demand for VAMI products in the downstream and industrial sector has picked up with delayed refinery turnarounds now increasing. Activity in the petrochemical industry, which supports many products and services, is expected to increase through 2021 and beyond. Investments in biofuel plants, carbon capture projects and hydrogen recovery projects are globally prevalent as the pressure for lower or zero carbon emissions has moved to the forefront.

Valve inventories supporting these applications are strong, with a wide variety of valve types, body materials and trim configurations readily available. Electric motor operators and pneumatic rack and pinion automation product inventories are complete and available worldwide from our 25 Valve and Engineering Centers (VECs).

As many companies turn their focus to lowering their carbon footprint, Low-E valve products have become the standard. MRC Global carries all valve types available in Low-E configurations, as well as a wide variety of refinery and petrochemical application-specific valve products.

3. Baker Hughes North America Rig Count: https://rigcount.bakerhughes.com/na-rig-count. Accessed April 15, 2021.