Our friends at Wheatland Tube have provided a steel and market update, which contains info about an anticipated 7% price increase on metal conduit in the near future. Steel conduit mills are pushing through their fourth price increase this year, after cumulative increases over the base of 8% in October, 17% in early November and a 25% increase in late November (December could mark a 33% increase).
Here are some underlying fundamentals of these price increases:
- Iron Ore prices remain high
- Steel mill capacity utilization at 78%
- Mills idling plants to keep supply / demand in balance
- Section 232 (25% Duty) remains in place for basic steel products coming into the U.S. from most countries.
- Section 301 (25% Duty) on a long list of products from China
- Negotiations ongoing between the U.S. & China
- Several U.S. Electrical companies are requesting exclusion wrongly claiming they cannot find these products outside of China –We have filed formal complaints with USTR and Customs to clean this up.
- Customs enforcing rules at all ports in regards labeling, marking and product classification
- Steel Conduit and Elbows per U.S. customs ruling are part of chapter 7306 and subject 25% duty under section 232.
- Several U.S. companies continue to wrongly classify this product to avoid duties committing customs fraud –We have filed formal complaints with U.S. Customs.
- Buy American
- Administration putting forth requirements that are driving greater consumption of steel products (including Conduit & EC&N).
- End Markets
- Nonresidential construction is second largest market for flat rolled steel, 2019 YTD +1.5% (PIP)
- Demand for new U.S. car sales remains strong, the largest market for flat rolled steel, 2019 YTD -.5% vs. prior year
How to manage these increases:
We anticipate another increase on metal conduit through the end of the year. Please call your Merfish or United Pipe representative for more information, to get your multiplier or to place orders now. We can help manage your inventory of volatile commodity products, allowing you to purchase what you need, when you need it.