Stainless steel pipe, fittings & flanges report: February 2017
The closing weeks of 2016 have proven to be the beginning of a steady trend regarding demand for stainless steel PVF. Following an often dismal and erratic year, December’s rebound offered signs of hope as the industry prepared to enter the fog of uncertainty surrounding 2017. Cautious optimism is moving closer toward confidence as inventory levels tighten to the point of limited shortages. Fueled by expectations of continued gradual growth in 2017, mills, master distributors and manufacturers are responding to increased demand.
The final quarter of 2016 witnessed pricing stability while also marking the beginning of gradual price increases. Significant increases associated with the cost of raw materials will continue to drive market pricing in a positive direction. Since its low in October 2016, chromium has demanded a greater than 70% increase. Molybdenum began to see increases in April 2016, and following a year of continuous pricing adjustments, it ultimately stabilized around 30% in the positive entering 2017. Stainless steel’s most significant pricing variable, nickel, continues to fluctuate as international environmental and political concerns inject uncertainty into both short- and long-term forecasts.
The Indonesian decision to reverse the ore ban stalled nickel’s rally. The announcement on Jan. 12 drove over-supply concerns resulting in a four-month low. February surcharges were lower than January’s in spite of a gradual recovery following the decision. March surcharges will be the key indicator for determining near-term forecasts. Filipino mine closures are expected to continue throughout 2017. The Philippines currently supplies 8% of the world’s nickel. Experts predict the reduction in supply attributed to mine closures will outweigh any potential increase realized from Indonesian exports. Long-term indicators include Chinese demand experiencing low port inventory and tightening first quarter supply levels. Some economists predict Chinese demand could increase by as much as 20% in 2017. Additional macro indicators effecting price advancements for nickel continue to be the strength of the dollar, interest rate hikes and oil price stability.
Outlook for some key stainless steel products
Surcharges have fallen recently due to lower nickel prices despite higher prices in other base metals. First-quarter domestic prices are affected in relation to the decline in surcharge. Bristol Metals has entered into an agreement to purchase the stainless pipe and tube assets of Marcegaglia USA. This could result in more firm domestic prices in the future. The transaction is expected to close March 1. Import prices have stabilized higher in the wake of anti-dumping duties leveled on Taiwan, India and Korea. Supply is consistent with no anticipated shortages.
Fitting prices are stable. Slight increases may be on the horizon as scrap prices continue to strengthen. Lead times should continue to be stock to two weeks. No shortages are indicated.
Stainless import ANSI flanges are stable and continued to see adequate supplies to the market. The expectation is for pricing to remain stable for the current timeframe.
Butt-weld products are expected to continue to see flat to moderate demand in the current period. Market pricing has been stable, but higher replacement costs may be indicated with the direction of pipe pricing. Overseas suppliers have provided adequate, steady production and continue to provide consistent and predictable lead times.
Increased oil prices and maintenance on downstream petrochemical production may indicate higher prices in the first half of 2017. Presently, supplies continue to be readily available with stable pricing.