2021 Q1 Porter Partnership Forecast
FIRST QUARTER FORECAST REPORT
As we enter the 2021 business year, we remain committed to being your premier source for not only the service-focused supplying of your material needs, but also for providing you with relevant market information and value. The best business partners share both good news, and challenging news, with equal levels of timeliness and transparency, and as your Trusted Partner, we will remain committed to that promise throughout the year.
The geopolitical climate, combined with the very real supply –chain impacts that the Global Covid-19 pandemic has made, have combined to produce a quickly increasing commodity pricing environment. We want to be sure to provide you with this information so you can be mindful of what to expect in the year 2021, and so you can approach your pricing needs and estimating work accordingly.
The chart shows the price of hot rolled steel coils, as they are sold to pipe mills to make carbon steel pipe. These price escalations are real and will be passed on to us as a distributor, and to you as a contractor. Suppliers who are not making you aware of these increases are not being honest with you, as they are coming.
Lead times are slipping out on pipe orders to 8 to 10 weeks, and mills are protecting quotes for 5 days right now, as more increases are coming. Although not imminent, shortages are a real possibility. Porter Pipe will use our extensive inventory to protect as many projects and as many partners as possible. Our recommendation is to get your pipe projects quoted and on P.O. ASAP.
COPPER TUBE AND FITTINGS:
The Copper Comex is currently trading at the low $3.70’s, this is up from the 52-week low of $1.9725 set back in April when the full impact of the Covid-19 virus on the global economy was realized. The rebooking in copper happened quickly and the price escalations will continue through the first quarter of 2021. The copper price was trading at its highest since March 2013 after Chinese data showed manufacturing and construction in the world’s second-largest economy was expanding at a pace not seen in a decade. The Chinese are the world’s number one consumer of copper. Their economy has rebounded to Pre-COVID levels much in part to their infrastructure stimulus projects enacted to restart their economy. Nobody has a “copper $ crystal ball”, but many are forecasting the Comex to go over $4.60 per pound.
IMPORT CARBON STEEL FITTINGS & FLANGES:
We are expecting 10% or greater increases in this project segment in the first quarter of 2021. As the business cycle turned down due to Covid-19, new orders at offshore mills were greatly reduced. As business is beginning to rebound supply is being stretched and price increases at the foundries are being applied to new orders.
DOMESTIC CARBON STEEL FITTING & FLANGES
No price increases announced, we do not foresee any increases in the first quarter of 2021.
BLACK MALLEABLE FITTINGS
A 6-8% increase has been announced and will take effect on January 4th, 2021. We expect this increase to hold. This is directly related to increased raw good costs. As base prices continue to increase, we expect another increase to be announced by the end of the second quarter of 2021.
STRUT CHANNEL AND FITTINGS
A 7-9% increase was announced and implemented in December 2020; this increase has held in the Market. Another increase of 8% was announced and will take place on February 1st, 2021. As the current steel markets continue to increase, we expect another around of increase before the end of the second quarter of 2021.
PVC PIPE & FITTINGS
This year’s hurricane season was particularly devastating to resin production. These storms caused many resin and chemical producers to claim force majeure on existing contracts. These storms greatly reduced the supply of the components needed to produce PVC pipes and fittings. As a result, we saw multiple price increases and product shortages that still have not been resolved. As supply was tightened, demand grew due to the housing boom we are currently experiencing. With supply still stretched and demand growing, we are expecting more PVC increases in the first quarter of 2021.
DOMESTIC HANGERS AND PIPE NIPPLES
A 6-8% increase has been announced and will take effect on January 4th, 2021. The second round of increases will take effect on February 1st. 2021. We expect this increase to hold. This is directly related to increased raw good costs. As steel prices continue to rise, we would expect to see another increase in the first half of the year 2021.
STAINLESS STEEL PIPE AND FITTINGS
Like most other commodities, stainless steel’s base components Nickle and Chrome have heavily increased. However, these increases haven’t moved into the market prior to the end of 2020. This is changing in the first quarter of 2021. Manufacturers and mills have already announced increases between 10-15%. The price gap between Import Stainless steel pipe and domestic has closed substantially on Stainless Steel Pipe currently, which has further constrained supply. We do expect another double-digit round of increase, but in the second half of the year.
BRONZE AND IRON VALVES
The fourth-quarter 2020 increases have held in the market. Some manufacturers have announced first-quarter increases, we expect more to be announced in the first half of 2021.
CLOSING STATEMENT FROM OUR CEO
As we enter 2021, we remain fortunate to have been able to operate through the Pandemic. We thank each of our customers for your Partnership during a tough year. We look forward to a robust 2021 and hope this report keeps all our Partners aware of the increases that are coming. Knowledge is power. God bless and we send our wishes for a healthy, prosperous 2021 to all.