2021 End of Q2 Porter Partnership Forecast
Can you believe we’re almost halfway through 2021? The summer months are here, and the country is continuing on its path to “normalcy” opening establishments back up and loosening restrictions. While this movement is certainly going in the right direction, commodity prices and lead times continue to move in an upward direction…
Our hope in providing you with these monthly forecast reports is to arm you with the information needed to confidently plan out upcoming projects with due diligence and relevant market intel. Knowledge is power!
On behalf of all of us in the Porter Pipe & Supply Family, THANK YOU for your partnership! We remain committed to serving as your trusted wholesale supply partner and promise to continue on in our quest to offer the very best service and the highest fill rate in the industry. We send our best wishes to you and your family for a healthy, safe and FUN summer 2021. God bless!
The Comex has traded over the past 30 days between $4.46 to $4.89. Many mills are running lead times between 6–8 weeks. These lead times are heavily impacted by the availability of trucking, mixed with the accelerated demand for copper tube since the beginning of this year. This new lead-time is an improvement over previously published lead-time. These lead-times will continue into the third quarter.
Prior to the material and product shortages we are currently experiencing, average lead-time on copper was 1-3 weeks. The cost of copper tube is expected to remain elevated through the remainder of the year as other variables such as transportation and labor costs have a higher-than-normal impact on the finished goods total price. We expect to see the Comex continue to trade around $4.50 for the next 30 days, with a peak of ~$5.00.
Domestic Carbon Steel Pipe
HRC closed out May 26 at $1,593/ton, a monthly increase of $181/tn. Domestic Mill lead times are 8–12-week range or longer. Prior to the material and product shortages we are currently experiencing, average lead-time on steel was 1-3 weeks. We expect the cost of coil to continue to increase over the month of June exceeding $1,600/tn. Lead times remain extended with restricted coil capacity continuing through the third quarter 2021.
PVC Pipe and Fittings
Resin converters are reporting shipments of 80-90% or less originally ordered quantities. Resin producers still have not fully recovered from last year’s hurricane season and the winter storms only furthered supply constraints. Pipe converters have stated that they will need 120% of their normal resin purchases to get out of their backlog by the end of the year.
Forecasters currently call for a very active hurricane season. The average Gulf temperatures are trending up, which will only lend credence to these predictions. If there is an active Gulf hurricane season this will further restrain supply of resin. Resin shortages will continue to be a concern and an impactful price event through the end of the year.
Other components such as stabilizers and TiO2 have increased over the last few months only furthering the price increases. With the shortages of these items manufactures cannot increase capacities. The previously announced increases have held. We further expect monthly price increase through the end of the year. In the month of May we received 2 separate and immediate price increases on PVC pipe, these will continue into the summer months.
We received notification of a DWV increase of 9% effective June 1 as well as a 5% increase on pressure fittings effective the same day. Manufacturer lead times on plastic pipe are extending 10-14 weeks with all producers publishing allocation notices. Some manufactures have stopped taking orders for Sch40 PVC pipe or are limiting their size offering to focus on their core customer needs. Prior to the current market dynamics, we faced previous lead-times of 1-2 weeks. The above-mentioned allocation amounts have been further reduced by some from a 1/12 annual purchase allotment to a 1/24 allotment.
Domestic Carbon Steel Fittings and Flanges
Like anticipated, on Friday May 28 we received notice of a price increase (effective immediately) from Weldbend. New published listing prices have increases ranging from 5%-12%, depending on the product.
Import Carbon Steel Fittings and Flanges
We forecasted an additional double-digit percentage increase on import carbon steel fittings and flanges in our May forecast, and it ended up coming through to fruition. We anticipate another round of escalations in the month of June.
Stainless Steel Pipe and Fittings
Stainless steel prices have rapidly increased within the last 30 days and will continue to rise. Supply of finished material continues to be disrupted as the offshored material is impacted by labor shortages at the ports—overall transportation restraints continue.
The COVID-19 flare up in India is really starting to show its impact on imported welded A312 pipe. Sanitary A270 has been extremely limited in supply as most domestic mills are running 30 weeks or longer lead-times at this point. The automotive sector’s demand remains robust despite the chip shortage. This is further constraining A270 supply as coil is being used to satisfy the automotive demand.
For stainless steel ANSI flange needs, supply is extremely tight right now after the most recent ITC action and there was a 25% price increase on this product segment announced in May. We do expect another round of increases.
There was also a recent increase of 10-15% on stainless steel butt-weld fittings and Type A stub ends (effective immediately). Price increases on this product segment are expected within the next 30–60 days.
Domestic Hangers, Channel Strut Fittings
The May increase on hangers held; however, we do not expect another round of hanger increases in June. An increase of 10% on strut fittings is expected, and we are preparing for another increase on strut channel to be announced in June.
Welded Pipe Nipples and Malleable Fittings
The 12% increase on nipples released in April has held. There is another 12% increase on welded nipples scheduled for this product segment in June. There is an 8% scheduled malleable increase anticipated for July, and we expect this to hold.
Bronze and Iron Valves
Most manufactures have announced increases for the latter half of June-early July. These increases range from 3-8% depending on manufacturer and product. From what we have been told, this will not be the last increase of the year in this category.
A105 Forged Fittings and Branch Olets
There is a price increase scheduled for July 1 that is anticipated to hold. 11.5% on forged fittings and unions, 15% on branch outlets.
Victaulic announced a 6% increase on April 1. This increase has held in the marketplace, with no new price increases currently announced for June.
Lochinvar Residential, Commercial and Tank Product
As of June 1, Lochinvar announced an increase of 4-8.5%. Current lead-times on residential water heaters are 16 weeks and pushing out further. Prior to the current market dynamic, we were facing average lead-times of 1-2 weeks on this offering.