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Home » Flange Forecast: 4Q 2014 Carbon Steel Welding Fitting and Forged Steel
Steve & Tom on PVF

Flange Forecast: 4Q 2014 Carbon Steel Welding Fitting and Forged Steel

January 6, 2015
Stephen Letko
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Three quarters of the year have come to a close as the total construction spending on a year-to-date basis was up 7.9% above 2013's level. Total private sector spending was up 11.3% and public spending was down by 0.% .

Office, lodging and power were up over 20% followed by manufacturing and residential sectors up by 10% during the third period. As predicted at the March meeting of board of directors of the MCAA the third quarter experienced an increase in private sector spending that will continue to accelerate in the fourth quarter and well into 2015.

Pricing for domestic carbon steel fittings and forged steel flanges will likely remain unchanged during the fourth quarter. Stability in pricing is anticipated to remain well into the first quarter of 2015. 

Availability of seamless pipe, plate and raw carbon steel forgings has remained stable with supply meeting increased demand. Pricing has also remained stable for these basic raw materials that are mandatory for production, thus eliminating the need for price revision.

It is important to continue to monitor the overall markets on a regular basis. Unrest in the Mideast, exacerbated by the escalation of military action against ISIS / ISIL, may cause unforeseen disruptions in raw material availability, instability of cost indices and energy supplies.

Demand continues to remain strong for the whole range of commodities as we enter the fourth quarter. Volume is expected to increase due to the release of new projects during the current quarter.
 

The U.S. Northeast is expected to see $3.5 billion in additional industrial projects being launched in the fourth quarter as a result of the success of the shale plays.
Much of the spending will be driven by the rapid increase in development of the Marcellus and Utica shales in Pennsylvania and New York.

Energy is the primer for power, pipeline and infrastructure spending that will impact Delaware, New Jersey, New York and Pennsylvania 

In the Midwest, Ohio is reaping the fruits of energy related projects with Lucas County leading the state with $16 billion in industrial development. These projects include power generation, refining and pipeline construction.

The Rocky Mountain region which includes Arizona, Colorado, Idaho, Montana New Mexico Nevada, Utah and Wyoming will see an estimated $7 billion in new project start ups in the fourth quarter. This includes spending in the Alternative Fuels, Mining & Metals, Heavy Industry and Power sectors.

The Southwest region that includes Arkansas, Louisiana and Texas is anticipated to see $30 billion in fourth quarter project starts fueled by the LNG boom. In addition, the Big River's steel minimill ($1.3 billion) and Koch Industries upgrade to the fertilizer plant in Enid ($660 million) add to the region's bright outlook for the fourth quarter and 2015.

The Southeast Region composed of Florida, Georgia, North and South Carolina will be major construction projects work fueled by the power industry, sports construction arena, commercial building renovations and data center construction.

A large problem facing the industry as a result of the large number of major projects being released for construction is the looming labor storm. As these projects are initiated the demand for craft labor, including welders, pipe fitters, millwrights and non-destructive testing technicians will present a major constraint for the construction industry as a whole. The supply and demand for the overall craft workers may cause costly delays or postponement of some of the planned start ups.

The fourth quarter presents tremendous opportunities for the PVF industry's construction sector. This momentum in new construction is expected to continue to launch a solid upswing well into 2015.

Stephen G. Letko launched his own firm, SPL Enterprises LLC, in 2000 after a distinguished career in executive positions with companies including Dodson Steel Products, Mills Iron Works and Crane Company. His expertise includes implementation of new markets; restructuring companies to improve their financial position; and developing marketing, quality and employee incentive programs. Contact him at 770-972-8282 or sletko@splenterprises.com.

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