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Profits in the pipeline: the tight supply of steel and record-high prices are challenging pipe and tube producers and distributors, yet most are rejoicing that demand looks "exceptional" through the first half of 2005.

Article Excerpt
While 2004 hasn't been without challenges--mainly raw material availability--this has been one of the best periods for North American carbon steel pipe and tube makers in years.

That is not true for all pipe and tube sectors. Most notably, large-diameter line pipe demand continues to be lackluster despite high energy prices.

"Demand for steel pipe and tube has been exceptional," says Norman Gottschalk, president of Marmon/Keystone Corp., Butler, Pa. "It began to pick up in November, continued to grow at a very accelerated pace through April and has since flattened out at a very high level. Even summer is not down as much as usual."

Dennis McGlone, president and chief executive officer of Copperweld Corp., Pittsburgh, says demand has been up to 20 percent higher than executives forecast when they drafted the company's 2004 business plan. While it varies by product, the strength is fairly broad, with distribution being a large contributor, he says.

Butch Mandel, executive vice president of Welded Tube Co. of Canada Ltd., Concord, Ontario, feels demand is softer than one might expect given the rate of activity in the North American market. "I think it's sticker price shock."

Bill Wolfe, executive director of the Steel Tube Institute of North America, says that while the strength in pipe and tubing can be attributed in part to the improving economy, a bigger influence on the rise in prices was the tightness in the steel supply early in the year, caused largely by China's hunger for raw materials.

China temporarily hacked off buying ferrous scrap, coke and iron ore, and world prices for those raw materials retreated in May and June, according to Don McNeeley, president and CEO of Chicago Tube...

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