2021 Mid-Q2 Porter Partnership Forecast
We are another month into Q2 and wish we could come to you with a report that pricing and lead times are 100% back to where we (would like and) usually see them…But, as your trusted source for material and partner in business, we are going to come to you with the cold hard facts on what you need to know about our current environment in the industry.
Over the past 30+ days we have seen an increased amount of price escalations. Between the increases already announced and the ones scheduled, we will be at 250+ individual price escalations this year so far. These escalations continue to revolve around shortages of raw goods, along with manufacturing/labor constraints. The global supply chain logistics are being challenged with no reprieve in sight. Wait times at ports for ships to get unloaded continue to push out.
Domestically, between the winter storms in the south and the inability for manufacturing to get raw goods and fill their labor needs, this has continued to contribute to price escalations and shortages.
Nevertheless, we will continue to serve as your partner for pertinent industry market updates throughout 2021 and remain committed to being your go-to source for value and transparency.
The Comex has traded over the past 30 days between $4.05 to $4.52. Many mills are running lead times between 8-10 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. These lead-times will continue into the third quarter.
The cost of copper tube will continue to be 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 increased the first week of May to $1,460/ton. Domestic Mill lead times are 8–12-week range or longer. We expect the cost of coil to continue to increase over the next month, approaching $1,600/ton. Lead times remain extended with restricted coil capacity continuing into the third quarter 2021.
PVC Pipe and Fittings
Resin converters are reporting shipments of 60%-75% or less originally ordered quantities. Resin producers still have not fully recovered from hurricane season and the winter storms only furthered supply constraints. Resin producers are still claiming force majeure and the turnarounds that were scheduled in April are currently ongoing and the scheduled. Formosa has begun their 26 day turn around starting on May 1st. This will further constrict 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 have 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. We saw an 8% DWV fitting increase on March 1st. We received notification of a DWV increase of 6% effective May 10th, as well as a 7% increase on pressure fittings effective May 3rd. The previously announced increases have held. We further expect monthly price increase through the end of the year. Manufacturer lead times on plastic pipe are extending 8-12 weeks with many producers publishing allocation notices.
Domestic Carbon Steel Fittings and Flanges
No increases have been announced yet, but we did hear from our domestic supplier that they are expecting shortages as the availability of raw goods becomes more constrained.
Import Carbon Steel Fittings and Flanges
There was another double digit increase in this product mix and another single digit increase soon.
Stainless Steel Pipe and Fittings
Stainless steel prices have rapidly increased within the last 30 days and we expect this to continue all of May. Supply of finished material continues to be disrupted as the offshored material is impacted by labor shortages at the ports—overall transportation restraints continue. This product segment is showing no signs of any sort of regression, even before the end of the year.
With the issues currently happening at the ports and the limited supply offshore with demand far outpacing supply, by August we would expect another 15% above the previously mentioned increases. The COVID-19 flare up currently taking place in India will have a large impact on commodity grade A312 Stainless Steel welded pipe. Sanitary A270 has been extremely limited in supply as most domestic mills are running 14 week 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.
We recommend you keep an eye out on your stainless-steel ANSI flange needs, supply is extremely tight right now after the most recent ITC action.
Domestic Hangers, Channel Strut Fittings
With the core component of this product segment being steel, we have seen another announced increase of 8%-15% on these product segments. We expect this increase to hold and there will be another round on increases this year. Current lead times on everyday strut channel items are extended past 10 weeks.
Welded Pipe Nipples
There is a 12% increase in April, we expect this has held. We expect another in the end of the second quarter.
Bronze and Iron Valves
No new announced increases for May, though with the high cost of freight and raw material increases, we would expect another round of price increases Q2/Q3.
A105 Forged Steel Fittings and Branch Olets
No new price increases announced lead times 4-6 weeks currently.
Victaulic announced a 6% increase on April 1st. This increase has held in the marketplace with no new price increases currently announced for May. Do note, we are experiencing longer than normal lead times on this material.
Lochinvar Residential, Commercial and Tank Product
As of June 1st, there is an announced increase of 4%-8.5%. Current Lead-times on residential water heaters is 16 weeks.