April, 2008

The year 2008 will certainly go down as one of the wildest years our industry has ever seen.  I have  worked for my family’s company since I was 16 years old, and am now age 57, but even during the late 70’s and early 80’s, I have never seen anything to compare with this.

We knew we would need to raise prices on fittings by the month of May because of the increases we received for bookings starting late in May.  We also knew we would be getting a price increase on billet for flanges.  We held back to try to do both increases at one time and produce a mailed price sheet, but we just received another notification of a $250 a ton increase from U.S. Steel, which means U.S. Steel has raised their prices approximately $750 - $850 a ton in a month.  We used to buy pipe at less than $750 a ton!  We do not have final numbers from our billet suppliers for the making of flanges, but we can wait no longer.  As of May 1^st, Price Sheet 508I will go into effect.  No printed Price Sheet will be issued.  The same discount structure and freight terms will be in effect.

All indications are that the steel market is still very tight.  The price of scrap steel is still expected to increase in May, although not as sharply as it did in April.  We talked to many steel manufacturers who told us that there are already some instances of allocation (the new terminology seems to be “C.O.E.” – Controlled Order Entry).  As time goes on, they feel that an increased use of allocation will be more common.  The steel makers are still concerned about getting some key elements in the making of steel, and this could be a bigger problem going forward.  We, at Weldbend, have turned down large orders that did not fit the buying patterns for those customers.  We will continue to do this so we can service the customers that have been faithful to us over the years; but this is no guarantee there will not be shortages of material.

At this time no one seems to know when these conditions or price increases will level out.  The high demand for fittings and flanges in the U. S. drilling fields is predicted to continue for some years because of the increasing use of natural gas, and the ability to drill and deliver new sources in excess of the rate we are using.

I wish we had better news for our customers so they could make plans, but at this time there is almost a weekly change.  For your planning, we think prices for fittings and flanges will continue to increase in the near future.  Again, as always, we appreciate your loyalty and if there is anything we can do to help you, please do not hesitate to call.  We will continue to keep you informed on a regular basis as to the fluid nature of industry pricing and happenings.

James J. Coulas, Jr.
President

You can depend on Weldbend!

www.weldbend.com