This month begins the final quarter of the calendar year 2024, with an election only a few weeks from when you read this column. The outcome of this election will have a tremendous influence on the direction of the energy sector of our economy and the PVF industry for the next four-plus years.

At stake: “drill baby, drill” and reduced useless, redundant and nonproductive regulations; or a ban on fracking, an increase in costly, nonproductive regulation and more taxes on producer profits.

Oil prices have steadied as supply concerns over Libya’s return vs. a smaller-than-expected draw in U.S. crude inventories that sapped demand expectations. As of this writing, oil prices find WTI at $68.35/barrel and Brent at $71.60/barrel.

Refinery margins remain weak in the United States and Europe, with New York ULSD (Diesel) and London ICE gas oil trading at their lowest in over a year.

Concerns about the slowdown in China’s economy and the continued contraction of the manufacturing sector (fifth month in a row) add up to a potential lower global demand, hence lower oil prices.

What is of more importance to the United States is whether it will have policies allowing for more oil production and pipeline approvals in 2025. It will have a greater effect on the industry, notes Diana Furchtgott-Roth, the Heritage Foundation’s director of the Center for Energy, Climate and Environmental Policy.

Industrial Manufacturing Capex Projects Worth $70 Billion

The manufacturing sector of the economy contracted for the fifth consecutive month in August, as predicted in the survey report by the Institute for Supply Management, and as demand continues to ease. However, there is a bright spot in the data. Industrial Info Resources’ Global Market Intelligence report indicates robust project activity in the U.S. industrial manufacturing industry for the remainder of the year.

Industrial Info Resources is tracking $70-plus billion worth of capital spending for U.S. industrial manufacturing projects projected to start in the fourth quarter. More than $30 billion of the $70 billion is related to data center projects.

Facebook and Instagram (Meta) are scheduled to start construction of an $840 million grassroots data center in Montgomery, Ala. Project startup is scheduled to begin this month.

Amazon is also set to begin constructing a $550 million Phase III data center expansion in Hermiston, Ore., in October.

Good news for Texas as the Public Utilities Commission of Texas selected 17 gas-fired projects, equal to about 10,000 MW, eligible for possible low-interest loans through the Texas Energy Fund.

Entergy Mississippi is planning on building The Nine Mile Point combined cycle, 649.5 MW gas-fired power plant, the first in 50 years. This will be the first grassroots project built for Entergy Mississippi. The plant will be located in Greenville, in the Mississippi Delta, and is scheduled for completion by 2028. The plant is designed to be powered by natural gas or hydrogen.

The U.S. Department of Commerce and Texas Instruments have reached a tentative, nonbonding terms agreement for $1.6 billion in federal funds to construct three semiconductor plants. Two of the plants are located in Texas, the other in Utah.

Shipping Congestion, Labor Disputes

The Port of Singapore, critical to global trade, is dealing with unprecedented congestion due to soaring cargo volumes generated by increased demand related to hedge buying ahead of expected tariffs and rerouting of shipping caused by geopolitical tensions.

Businesses worldwide face increased costs, supply chain disruptions and stock shortages. The ripple effects will ultimately be felt by the consumer, who will bear the burden of higher prices.

As of this writing, the International Longshoremen’s Association is poised to strike ports on the East and Gulf coasts if an agreement is not reached by Sept. 30, casting additional concerns for supply chain disruptions. 

The ongoing labor disputes introduce an element of uncertainty into the fourth quarter. A strike would exacerbate existing supply chain challenges, leading to costly delays, product shortages and higher prices.

Commodity Products

The pricing and the availability of commodity carbon steel butt-welding fittings and forged steel flanges remain stable. Domestic producers continue to cope with rising labor, energy, insurance, regulation and transportation costs.

Pricing for nonferrous metals is expected to remain flat or lower for the rest of 2024. The pricing outlook for these metals is expected to resume gains resulting from anticipated lower interest rates from the Federal Reserve. Price gains should resume as growth in business fixed equipment and structures picks back up.

Risks to this assumption are balanced. A later shift in expected monetary policy in the U.S. could lead to more drags on demand and production in the metals industry.

This, along with tensions continuing to rise in the Middle East and the Pacific, along with the rerouting of shipping from the Red Sea caused by the continuing attacks on commercial shipping by the Houthi supply chains, are at risk for major disruptions. As of this writing, a crippled oil tanker poses an environmental issue in the Red Sea as a result of a Houthi missile attack, restricting shipping lanes.

It is wise to remain in close contact with your manufacturer/supplier to avoid surprises regarding U.S. Tri-Seal compliance, pricing and the availability of pipe, forged flanges, butt-welding fittings, valves and other PVF-related products.

PVF Roundtable News

Labor issues continue to linger in the construction industry. Brett Clark, vice president of Dunn Building Co., headquartered in Birmingham, Ala., agrees that workforce availability remains the greatest struggle for specialty firms: “Everywhere I go, it is the same; ‘We need more people.’”

While Clark says the company has successfully maintained its management team, the availability of craft employees is the “difficult piece of the puzzle” on projects.

The PVF Roundtable recognizes the need and is actively engaged in supporting trade schools and student recruitment for the industry through the PVFRT Charitable Foundation. Scholarship awards exceeded the $2 million mark at the August 2024 meeting.

The PVF Roundtable Golf Tournament scheduled in May was canceled due to extreme flooding. It has been rescheduled for Dec. 9, 2024. Please check the PVFRT website (www.pvf.org) for updates and details.

The PVFRT Trout Blast was scheduled for Oct. 3-4, 2024, with the Captain’s Dinner on the third, followed by the tournament on the fourth. The event was, again, a record-breaker benefitting the PVFRT Educational Foundation.

The PVF Roundtable Golf Tournament and Trout Blast are the major fundraising events for the PVFRT Charitable Foundation scheduled for 2024. The Weldbend Corp., Ferguson Industrial and MRC Global are key sponsors of these events.

 The next Networking Meeting of the PVF Roundtable is Dec. 10, 2024, beginning at 4:15 p.m. The Christmas Party and Casino event, along with the PVF Young Professionals Annual Toy Drive, will be held at Houston’s The Bell Tower on 34th.

As a member of the board of directors, and I speak for all members, we thank you for participating in these events.

The pending U.S. election and geopolitical uncertainties in the world today and the potential impact they present to the PVF sector give reason for concern. 

Networking Meetings are now, more than ever, essential for you, your associates and clients to discuss the issues of concern. These events provide the platform to share information, discuss pertinent issues, meet new contacts, develop new long-lasting friendships and pursue new opportunities in the industry.