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Today, the modern purchasing agent is tasked with collecting reliable and usable knowledge of many products. Some products are easy to understand and some are not; steel pipe falls into the latter category. How well the pipe supplier’s salesperson knows the products it sells will help determine success in making the sale and creating a seamless transaction, resulting in a satisfied customer.
Many seasoned buyers will rely on a knowledgeable salesperson; however, it is imperative that the purchaser also understand the basic information required for purchasing steel pipe.
Creating a meeting of the minds is the intersection of this effort and the basis for successfully completing the purchasing process. Although small and repetitive transactions generally proceed with only verbal instructions, in most cases, such instructions result in a binding contract that may be difficult to enforce.
For the best results, transactions of all sizes should be executed in writing via a formal quotation, followed by a written purchase order to avoid any misunderstandings and possible costly errors. The formal quotation and purchase order should include the following:
Let’s explore each of these items as it pertains to steel pipe.
Description of Material
Steel pipe has four basic manufacturing processes:
1. Furnace weld (FW): 1/2 inch through 4 1/2 inches
2. Electric resistance welded (ERW): 1/2 inch through 26 inches
3. Seamless (SMLS): 1/8 inch through 36 inches
4. Submerged arc weld (SAW) or double submerged arc weld
Longitudinal seam (LSAW): 20 inches through 48 inches
Spiral or helical seam (SSAW or HSAW): 8 5/8 inches through 144 inches
Each of these manufacturing processes may be governed by different specifications, the most common being the American Society for Testing and Materials (ASTM), the American Petroleum Institute (API), the American Society of Mechanical Engineers and the American Water Works Association. Pipe produced by any of these manufacturing processes will be marked, stamped or tagged as to the specification, along with other common information, including the grade, origin, process, size, wall thickness and length.
Prime steel pipe also will be accompanied by an Original Certified Mill Test Report or Certificate verifying the adherence of the pipe to the specification. This test report is the pipe producer’s product warranty.
Note that steel pipe manufactured in sizes 1/2 inch through 4 1/2 inches may be produced by three different processes. It is important for the buyer to request the process best suited for the application or designate that no particular process is required. If unsure, an engineer’s input may be required. For instance, seamless pipe is most suitable for steam or higher-pressure applications involving bending, coiling and flanging.
When ordering steel pipe, a buyer must advise the desired pipe specification; typically, either an ASTM or API specification. The most common pipe specifications for the PVF industry include ASTM A53, A106 and A795. A steel pipe buyer also may encounter API specifications, most likely API 5L, which is the specification for API line pipe.
Along with this specification, the buyer needs to advise the desired grade of that specification. ASTM specifications are Grade A or B, with Grade B being of higher strength along with other more desirable characteristics — usually, the higher the grade, the higher the price.
API 5L specifications are based on the physical and yield strength of the pipe. In addition to Grades A and B, API 5L uses X- (yield strength) to describe the pipe’s strength. For example, API 5L X-42 requires a minimum yield strength of 42,000 psi, which is a higher yield strength than Grade B.
Steel pipe of nominal pipe size (NPS) 14 inches and larger is represented in its actual outside diameter (OD), whereas pipe smaller than NPS 14 inches is described with a nondimensional description (in name only) and not an actual pipe dimension.
For instance, the pipe size NPS 1 1/2 inches has a 1.90-inch OD. Pipe was originally used for water movement and, therefore, the inside diameter (ID) was the critical dimension. However, in manufacturing, the machinery forms the outside diameter. So, a piece of 1 1/2-inch pipe with an outside diameter of 1.90 inches will have a different inside diameter, depending on the actual wall thickness of the pipe. Thus, the industry chose to use NPS as a nondimensional size indicator.
The ASTM and the API use different nomenclature to describe the pipe size. Pipe charts are abundantly available on the Internet to help buyers further understand what they are purchasing. If one is working with an ASTM pipe chart, a 4 1/2-inch OD pipe is generally referred to as 4 inches, and a 6 5/8-inch OD pipe is referred to as 6 inches. On the other hand, API uses actual OD to describe sizes, so NPS 4 inches is appropriately labeled as 4 1/2 inches, and NPS 6 inches is 6 5/8 inches. It can be quite confusing; this is why product knowledge is so important.
The thickness of the steel pipe wall is important and needs to be shown in the purchase order. Often the wall thickness can be expressed using the term “schedule.” A pipe chart is an excellent reference guide for engineers, buyers and sellers. Pipe charts show the actual size, theoretical wall and theoretical weight of the most commonly used steel pipe.
The pipe chart is broken down into schedules (Schedule 10, 20, 30, etc.). Schedule 40 and standard wall are the same until you reach NPS 12 inches. Beginning with NPS 10 inches, Schedule 80 and extra heavy reflect different wall thicknesses. This can be very confusing. The point is that using the actual desired wall is often the best way to avoid a misunderstanding.
Steel pipe may be ordered in different lengths, either uniform or random. If a buyer fails to advise the desired length, he may receive a uniform or random length pipe that will not meet the project’s needs. The pipe ends may be square cut, beveled, grooved or threaded. Most threaded pipe also comes with a coupling on one end. The pipe may be bare, lacquer-coated, galvanized or coated with a corrosion-resistant fusion bond epoxy. All these items are important characteristics the buyer must designate.
The price is generally stated in dollars and cents per foot or hundred feet. However, sometimes it is stated in price per ton. It is essential that the price be affirmed in writing to eliminate any confusion.
Terms and Conditions
All transactions need clarity on several nonprice matters. Many companies publish their full terms and conditions, written in legalese and often challenging for supply house employees to understand. However, terms and conditions should not be ignored or taken lightly. If a problem arises with the order, the terms and conditions will play an integral role in the final disposition.
Here are a few of the most pertinent terms that are usually part of the quotation and purchase decision.
1. Payment terms. These can impact a buyer’s purchasing decision and final cost. Payment terms can vary from cash in advance to payment upon delivery to payment in the future. Terms for payment in the future may include a cash discount, which should be clearly stated, and the number of days within which the payment should be paid to earn the cash discount. If no cash discount is offered, the buyer should be certain to pay the invoice when due to maintain good relations with the vendor.
2. Delivery terms, FOB point. FOB is a term in the United States and the International Commercial Commission (ICC), specifying at what point the seller transfers ownership of the goods to the buyer. The most common are:
Shipping point. The title to the material is transferred to the buyer at the shipping point; the seller loads the truck at their risk and expense. Transfer occurs at the signing of the bill of lading.
Shipping point, freight allowed. The title to the material is transferred at the shipping point, but the seller will include the full cost of the freight to the destination as part of the selling price. Transfer occurs at the signing of the bill of lading.
Shipping point, prepaid and add. The title to the material is transferred at the shipping point. The seller will arrange the shipping to the destination, and prepay the freight charges and add the freight to the invoice as a separate charge. Transfer occurs at the signing of the bill of lading.
Collect. The title to the material is transferred at the collection of the payment for the material, whether the material is delivered to the customer or at the seller’s yard as mutually agreed upon.
Delivered. The title to the material is transferred at the delivery point after the material is unloaded. The seller is responsible for the material through the unloading process, even if the seller does not pay for the unloading.
Note: This is the most misused term in the industry. It is suggested to avoid this term unless you are aware of or intend to provide for the liability inherent in the unloading of the material.
3. Shipping instructions. Establish a clear understanding of the delivery intentions. When will the material be delivered, and by what means?
4. Special notes. The time to express concern about any part of the sales transaction is before it occurs; for instance, if this transaction is subject to the confirmation of the producing mill or if there may be any shipping restrictions. These notes protect both the buyer and the seller. Other things to be aware of include the validity of the quotation. Is it valid for a year or only a few days?
Acknowledging the need for an organized approach to educating anyone interested in the world of steel pipe, the National Association of Steel Pipe Distributors (NASPD) began a basic training program in 2004. This effort attracted a faculty of established, deeply experienced and extremely reputable industry leaders to volunteer their time as presenters in a classroom forum.
This effort led to the yearly presentation of the Steel Pipe Basic Education Course. The content covers raw steel production, the four pipe manufacturing methods, the various required product testing procedures and mill test reports, corrosion protection, the governing specifications and transportation involved in the distribution of steel pipe.
It also covers the pipe ordering process and the math associated with it. Over the years, the course has attracted people involved in every aspect of the business, including sales, purchasing, operations, accounting, engineers and architects.
If you wish to further your education concerning the manufacture, distribution and use of steel pipe, contact the NASPD (www.naspd.com) for information on the next presentation of the Steel Pipe Basic Education Course.
Bill Buckland is the president of Mandal Pipe Co. in Atlanta and has been selling steel pipe for more than four decades. He specializes in the sale of large-diameter steel pipe and has provided material for some of the highest-profile projects in the United States. He is a past president of the NASPD and currently serves on its board of directors and Media Response Team. As chairman of the Education Committee, Buckland was the driving force in assembling the training manual now used as the standard for training new steel pipe sales personnel.