Uncertainty regarding the status of President Donald Trump’s tariffs continues, pending a Supreme Court ruling and, as of this writing, the possibility of another government shutdown. Congress “kicked the can down the road” until the end of January; as of this writing, there has been no indication of progress on the Obamacare subsidies or alternatives.

Continued frustration by the administration with Federal Reserve Chairman Jerome Powell regarding interest rate reduction has the industry in a wait-and-see posture, pending his replacement in May. High interest rates were a component of a restrictive environment involving the construction industry as we began the year.

The rate cut in December 2025 has given some relief, and easing bank regulations have made access to credit a bit easier.

Recent statements from governors suggest mixed sentiment. Some indicate a willingness to support additional cuts if economic data regarding inflation and employment signal a need for additional easing. 

Kathy Bostjanicic, a prominent economist, anticipates two more rate reductions in 2026.

Firms hoping for more rate cuts may be disappointed as inflation remains stubbornly above the Federal Reserves’ 2% target.

Crude oil markets entered 2026 cautiously, with Brent crude trading at $62.58 per barrel and WTI at $58.70 per barrel, as of this writing. This slightly bearish market sentiment reflects the industry’s growing concerns about oversupply, which could pressure prices throughout the year.

OPEC+ announced in December 2025 that it would pause further production increases during the first quarter of 2026 in response to weakening prices. 

Despite the pause, OPEC+ is still expected to pursue the reversal of remaining voluntary production cuts later in the year. This could result in bringing an additional 1 million barrels per day to the market.

Price forecasts by major financial institutions remain subdued and have issued conservative price outlooks:

U.S. Energy Information Administration: Brent at an average of $55/barrel in first-quarter 2026;

J.P. Morgan: Brent at $58/barrel for full year 2026;

Goldman Sachs: Brent maintains a range of $60 to $70/barrel with downside risk.

Venezuelan dictator Nicolas Maduro’s arrest and related U.S. actions regarding Venezuela’s oil will put additional pressure on oil prices. The heavy crude from Venezuela is what Gulf Coast refineries are well equipped to handle. 

Venezuelan oil is comparable to Canadian crude extracted from the Canadian Tar Sands and may negatively impact Canadian production.

However, investment in upgrading ill-managed facilities will be costly (in the billions) and take time to complete before production is significant enough to have a major impact on supply and pricing.

Construction news

The U.S. petrochemical sector has seen a rough 2025, with prices pressured by weak demand, oversupply, lower energy costs and persistent trade uncertainty.

Producers aim to keep existing facilities in the best condition in their current market environment.

Industrial Info Resources is tracking more than $480 million of maintenance-related projects at U.S. chemical processing plants that are set to kick off in the first quarter. The largest investments are from BASF SE, LyondellBasell Industries and Chevron Phillips Chemical Co.

BASF accounts for more than 25% of its total investment in the first quarter, centered around its petrochemical plant in Port Arthur, Texas.

As demand for ethylene rises both domestically and globally, other producers are improving their production units. Ethylene units account for $130+ million of the more than $480 million in maintenance starts in the first quarter.

Chevron Phillips Chemical Co. (a 50:50 joint venture of Chevron Corp. and Phillips 66) is preparing to begin work on Ethylene Unit 22 at its Old Ocean plant in Sweeny, Texas. LyondellBasell expects to initiate a turnaround on a single-train ethylene unit at its plant in Clinton, Iowa.

Energy Transfer has announced that it expects to invest $5 to $5.5 billion in growth capital during 2026. Several new projects are scheduled to ramp up or come online this year. These include Nederland Flexport NGK expansion, Mustang Draw I and Mustang Draw II processing plants in the Permian Basin, Hugh Brinson Pipeline Phase I NGL projects on the Lone Star Express and Gateway pipelines, and natural gas pipeline projects serving data center facilities in Texas.

Strong demand for infrastructure components from the transportation, energy and other sectors of the economy is driving the expansion of many downstream plants, including casting facilities and pipe mills.

Canerector is expanding its Kent Foundry in Greenville, Michigan, and ME 

Elecmetal is upgrading its steel casting facility in Duluth, Minnesota.

American Cast Iron Pipe Co. is preparing to expand and upgrade its Birmingham, Alabama, plant, which produces electric-resistance-welded pipe for the oil and gas industry.

Borusan is also preparing to expand and upgrade its plant in Panama City, Florida, which makes large-diameter, longitudinally welded steel pipe for the construction sector.

Labor and materials costs

Workforce shortages continue to be a restraint on the operating environment.

Associated Builders and Contractors estimates that the industry will need an additional 500,000 workers this year due to the persistent shortage of skilled labor.

Arizona’s Gov. Katie Hobbs and the Arizona Office of Economic Opportunity announced an additional $3 million to be awarded to 10 apprenticeship programs through the BuildItAZ Apprenticship Initiative.

The initiative, launched in 2023, aims to assist in filling more than 20,000 construction jobs that the state projects will be needed by 2030.

Rising materials and equipment costs are adding to the strain on developers.

Anirban Basu, CEO of Sage Policy Group and a Construction Financial Management Association advisor, sees the impact of tariffs in the manufacturing-related construction sector. Fifty percent of what the United States imports are intermediate goods and, so far, manufacturers’ costs have risen and margins have shrunk.

Manufacturers and contractors working under fixed-price contracts signed prior to 2025 price increases are now facing tighter contingencies and more frequent negotiations with owners.

Pricing and the availability of butt-welding carbon steel fittings and forged steel flanges remain, as of this writing, stable. Prices will rise, and they need to be closely monitored to avoid being caught by surprise.

The amount of the increase has not, at this writing, been determined as the uncertainties regarding tariffs persist. Some manufacturers/suppliers have taken the initiative to make price adjustments, while others have taken a “wait-and-see” approach.

U.S. Customs and Border Protection has seen a rise in transshipments, especially of Chinese-origin goods, to circumvent trade enforcement measures. Violations can lead to severe consequences, including fines, shipment seizures, business disruptions, loss of import privileges and reputation damage.

PVF Roundtable networking

The PVF Roundtable (PVFRT), through its charitable foundation, passionately promotes the funding of trade schools and education programs at community colleges.

These programs address the critical need to expand the skilled labor pool in the construction, fabrication and supply chain sectors of the PVF industry. Scholarship funding through the PVFRT Charitable Foundation is approaching $3 million.

The foundation’s primary funding are generated from the PVFRT annual golf tournament and the annual TroutBlast. The Weldbend Corp., Ferguson Industrial and MRC Global are key sponsors of the events. 

MRC Global and DNOW have announced the completion of their merger. They will, for the near term, continue to serve their respective clients through their usual contact and support teams, which will remain the same as before the acquisition.

PVFRT looks forward to the continued support of the combined company.

PVF Roundtable’s annual golf tournament will be held May 11. Venue and details will follow and will be posted on the website (www.pvf.org).

The next networking meeting of The PVF Roundtable will be held May 12, opening at 4:30 p.m. Please bring your clients and associates for the opportunity to meet industry peers up close and personal.

It will be held at Houston’s Bayou City Event Center. This venue will provide additional space and convenience for exchanging information and meeting new colleagues.

The PVF Roundtable continues to serve as a vital hub for industry networking, education and advocacy. Recent and upcoming events reflect the sector’s commitment to collaboration and innovation.

Networking meetings are now, more than ever, essential for you, your associates and clients to share information, discuss pertinent issues, meet new contacts, develop new long-lasting friendships and pursue new opportunities in the industry.