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Pipeline Pricing

Pipeline pricing affects the pipeline construction industry's bottom line. Recently, a major resin supplier to the polyvinyl chloride (PVC) pipe industry declared "force majeure." This is an unexpected and disruptive event, such as an act of God, inevitable accident or unavoidable casualty that may operate to excuse a party from a contract. Recently, such an instance adversely affected material availability for plastic pipeline production, causing increasing pricing in pipe materials because this resin is a key component used for making sewer, water pipeline and storm drainage system PVC-specific pipelines and to some extent, high density polyethylene (HDPE) pipelines.

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Most plastic pipeline suppliers such as Vinlytech, JM Eagle and Diamond Plastics have cancelled all outstanding PVC pipe quotes and are reviewing the already outstanding PVC pipe material back orders by implementing a system that will give priority to job-direct vs. stock orders. That is, they will give preference to those orders that will allow shipment of all related PVC pipeline material directly to the jobsite, and in some cases, delivering existing orders in full in April and May, rather than carry inventory and ship out to a job site as needed at some point in the future. General contractors, pipeline contractors, lenders and construction project owners alike, will ultimately need to front the bill for materials on site that may not necessarily be installed for several months out, in order to save on PVC pipeline and related PVC material pricing.

According to Advance Drainage Systems (ADS), maker of HDPE and other storm drainage systems, with rising fuels costs, the recent disaster in Japan, coupled with operational issues at several US ethylene producers, has resulted in cost increases of crude oil and other oil/natural gas derivatives used to produce HDPE resin.

Due to these recent circumstances, PVC pricing is said to have increased by as much as 30-50% price per linear foot of pipe. In some cases, plastic pipeline price per foot is equal to or more than metal, i.e. ductile iron pipe, price per foot. Types of PVC pipe such as PVC C-900, PVC Schedule 40, and PVC Schedule 80 are primarily used in water pipeline pressurized systems. Other types of PVC pipeline pricing affected by this economic short fall is PVC SDR 35, and high density polyethylene (HDPE), which are more commonly used for unpressurized pipe applications, such as sewer and storm drainage systems installation. Nonetheless, all of these would fit the affected category of "plastic" pipes whose price has been increased to some degree.

While this increased pipeline pricing is expected to be temporary, it will not likely be as quick to drop back down as it arose. Pipe manufacturers are suggesting that these prices will be in effect for several months and will keep pipeline contractors and pipe vendors informed as events unfold. Pipe suppliers are reminding contractors to confirm validity and ship dates of open orders, read the fine print in reference to their terms and conditions, and review all order acknowledgements as they are and will continue to change pending further pipe material affected economic circumstances.

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Published on April 29, 2011 | Comments: 2

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Thanks for this wonderful review! Looking forward for more of your post in the future.

Thank you. We're glad you enjoyed it.

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