February Market Update, Import Steel and Shipping Increases

What’s happening:

Click here to see our new globally sourced welded steel pipe list price sheet.
A global shipping container shortage is causing import prices to skyrocket.
Lack of availability of raw materials, including steel, are contributing to high costs.
New list price sheets for domestic steel, PVC plumbing, strut and threaded rod released in January.

Globally Sourced Steel Pipe Increase on 2/1

Click here to see our new globally sourced welded steel pipe list price sheet, dated 2/1.

The global steel pipe market continues to undergo dynamic changes due to a confluence of factors related to the unique challenge of the complicated supply chain involved in importing steel pipe.

Rising costs at both the shipping and receiving ports, a global shipping container shortage and shipping and devanning increases (see below).
Increasing domestic trucking freight costs (see below).
Global demand for steel products remains high, and raw materials cost (Hot Roll Coil) continues to rise.

We believe these price increases and market volatility will continue through the first half of 2021 at a minimum. Because of these recent market changes, we will be implementing our third increase of 10% on globally sourced steel pipe products effective Monday, 2/1. A new list price sheet will be uploaded to our website then.

Please call your representative for more info or to place orders. You can download list price sheets on our website, where you can enter your multiplier in the Excel sheet for individualized pricing.

Steel Prices Remain Historically High

Steel is in tight supply, with the benchmark price for hot-rolled steel reached a new record high of $1,080/ton last month. With mills having idled capacity due to Covid-19 and demand rising from construction market segments, getting steel from mills continues to be a slow process and keeps overall stock low. Contract customers for steel get inventory at a slower pace, while spot buyers are paying huge premiums for material.

Shipping Increases and Container Shortages

Compared to March of 2020, freight rates from China to the U.S. have surged 300% with spot rates up to about $6,000 per container compared to the usual price of $1,200. The is due to China’s faster Covid-19 recovery and more goods being exported from China than out of the U.S., which has resulted in containers being stuck in the West when they’re most needed in Asia. Not being able to wait for return cargo, 3 out of 4 containers are now being returned empty to Asia.

In the U.S., Covid-related manpower shortages led to backlogs in unloading containers at the docks and delays in drivers or railways workers to receive the unloaded containers for freight. This created a bottleneck leading to other regions, helping to drive demand for containers up along with the price. With container costs and related freight so high, the cost is being passed along to their content, in our case raw materials used for pipe production or the import pipe products themselves.

With the Chinese New Year holiday period in February expected to slow Chinese exports, a re-balancing of containers will hopefully bring the current situation back to normal. Until then, the costs of anything being imported on containers will remain at these historically high levels.

New List Price Sheets

In addition to the new globally sourced welded steel pipe list price sheets we will be releasing on 2/1 and 2/15, here is a list of recently updated list price sheets and expectations for changes:

PVC Plumbing Pipe – Dated 1/25/21.
Domestic Welded Steel Pipe – Dated 1/20/21.
Strut & Threaded Rod – Dated 1/18/21.

In addition, Copper continues it’s volatile streak, closing at $3.58/lb on Wednesday, but still way up over the past 30 days. This is another commodity product that’s highly in demand on the world market due to Chinese consumption, and is expected to lull during the Chinese New Year in February. After that, it’s expected to continue it’s rise in 2021.

How We Can Help:

As we face extreme volatility in the commodities market, remember that Merfish United’s business model is designed for low and unpredictable volume scenarios, exactly like the one we are in right now. With us, wholesalers can buy a broad array of pipe products from one supplier, at low minimums for FFA.

We keep our stock high, so use us to help manage your inventory and buy what you need, when you need it. Mix-and-match Copper Tube with Steel Pipe, PVC Pipe, Conduit, Strut & Rod to make our low weight minimums on your next weekly order.