While industry observers views on the future are
clouded, the consensus is that the mechanical tubing market
will be largely unchanged for the rest of this year and into
next year, with a slight uptick possible depending on what
direction the domestic and global economies take.
Right now, mechanical tubing demand is OK. It
isnt great, but it isnt atrocious either. But it
has been weakening a little in the past few months, said
William A. Wolfe, executive director of the Steel Tube
Institute of North America. The fact that mechanical tubing is
used for some of the stronger end-use
applicationsincluding the automotive, heavy equipment,
and oil and natural gas sectorshas helped buoy demand
Nevertheless, the recent slowing of the domestic and global
economies is affecting the market, Paul Vivian, a partner at
Preston Pipe Report, Ballwin, Mo., said. I see mechanical
tube turning flatter. It will continue to grow, but by smaller
Mechanical tubing shipments through July rose 12.1 percent
compared with the first seven months of 2011, but they fell
month on month in both July and June, Vivian said. That is
partly due to seasonal factors, with July usually the weakest
month for mechanical tubingeven weaker than the slowdown
for the holidays in late November and December, he said.
But all the uncertainty in the marketplace is viewed as
exacerbating the situation.
Manufacturing as a whole continues to struggle,
said Christopher Plummer, managing director of Metal Strategies
Inc., West Chester, Pa.
Especially concerning was the August drop in the Institute
for Supply Managements manufacturing purchasing
managers index to its lowest reading since July 2009. At
49.6 percent, it was the third consecutive month that the PMI
was below the 50-percent dividing line representing a
contraction or expansion of the U.S. manufacturing economy.
Uncertainty about the global economy, as well as U.S. fiscal
policy amid the ongoing presidential election, has resulted in
a very cautious business climate for most steel products,
including mechanical tubing, Plummer said.
We have to wait for more clarity, Wolfe
No matter who wins the election, I think we will see
more of what we are seeing today, Vivian said, predicting
that after a seasonal bump, the market will be relatively flat
through next year. At best it will be up 4 to 7 percent