Dear Valued Customers,
The third quarter of 2022 is in the books, and to summarize it in just a few words, it was “an accumulation of economic bad news”. The headlines from the past few months are all about Fed tightening, rising prices, looming recession, and increasing geopolitical risk. Conditions specific to pipe are addressed below, but first, I offer a recommendation that most of your suppliers probably would not. I advise you not to buy pipe right now, even though I’d love to sell it to you. Here’s why:
» High inventories — With port delays and vessel shortages in the first half of the year, much of the import steel pipe was late, meaning distributors had to buy it out. While waiting for delayed shipments, distributors bought pipe from domestic sources, salvage sources, or competitors to fill in for late shipments. We still had to take the late shipments. When the supply chain catches up, we end up holding a ton of pipe. That is what is currently happening to us and many of our competitors. That means there is a lot of excess pipe on the ground right now and distributors are aggressively trying to move it.
As we wind up 2022, I recommend that you buy only what you need and resist the urge to stock up on inventory just because the material is cheaper than in prior months. I predict that the pricing by January will be as much as 10% cheaper for grade B and 30% cheaper for grade A pipe than it is today. Pipe will be abundant through the rest of 2022. Supply chain disruptions are mostly resolved, and I don’t expect any more, at least not of the magnitude we’ve experienced since 2020. Pipe will ship on time or even early going into next year. Beyond the first quarter, demand will determine what the pricing does, but for now, wait as long as possible to buy steel pipe and PVC.
Cal Sierra Pipe, LLC