We are approaching the end of calendar year 2024 and Donald J. Trump is our president-elect, giving the energy and PVF sectors a breath of fresh air for future development and lower-cost energy.

Domestic manufacturing, especially in the PVF sector, has reason to be optimistic as our new president is keen on bringing manufacturing back to U.S. shores. This is especially important for critical industries, including the U.S. forging industry.

The United States is confronting a plethora of threats to our national security and economic competitiveness. The forging industry is struggling to stay alive and many in the heavy forging industry have succumbed to offshore competitors.

This is the industry that converts raw metals and alloys into forgings, using skilled workers that make up the backbone of our armed forces and energy infrastructure: tanks, warships, submarines, aircraft, pipelines, power plants, refineries, petrol-chemical plants, etc.

For years, unfair trade practices have siphoned off billions of dollars’ worth of work from American forging companies. Since China entered the World Trade Organization in 2001, more than 241 plants have closed or consolidated and 21,000-plus jobs have vanished.

 Plymouth Tube Co. completed the sale of its Winamac, Ind., carbon and alloy seamless tube mill to an affiliate of Shadowbriar Capital Partners. It will operate as a stand-alone business named Crossroads Seamless USA.

The Winamac site consists of a cold draw, a hot mill and a quench-and-temper line that manufacture carbon and alloy seamless steel tubing for diverse end markets such as construction, drilling, utilities, military, oil and gas and other industrial applications.

‘Without Adequate Domestic Capacity’

The Department of Defense (DoD) acknowledged that “foreign competitors dominate the value chain” and the “domestic workforce is shrinking.”

What is needed is higher tariffs on Chinese forgings and castings; more aggressive efforts to prevent China, India and others from dumping into the U.S. market; and outright bans on certain countries supplying critical components for the defense sector.

“Casting and forging are fundamental components of manufacturing; without adequate domestic capacity, DoD cannot sustain its current force or modernize critical platforms, systems and weapons,” the defense department notes.

Our industry, and our nation, look forward with great anticipation to President-elect Trumps’s approach to address these crises with tariff platforms and incentive programs to aggressively revitalize the manufacturing sector of the economy.

As of this writing, WTI is trading at $71.29/barrel and Brent is at $74.85/barrel as OPEC+ delays plans to increase production. Geopolitical uncertainties and weak demand, especially in Asia, weigh heavily on its decision to delay the anticipated increase of 180,000 barrels/day (bpd).

Seventh Straight Month of Contraction

The Institute for Supply Management released its monthly manufacturing Purchasing Managers Index (PMI), reporting the seventh straight month of contraction due to weak demand and cautious investment decisions. The PMI index reported in November was 46.5 percent, the lowest in seven months (anything below 50 percent indicates contraction).

Capital spending outlook dips as tax increases loom. Congress must act before the end of 2025 to prevent scheduled tax increases on manufacturers. 

In addition to the already expired immediate expensing of research and development, pro-growth interest deductibility standard for business loans and 100 percent expensing of capital purchases, tax policies critical to the manufacturing sector of the economy, such as the 20 percent pass-through deduction, individual tax rates and the estate tax exemption threshold, will expire or be weakened at the end of 2025.

LyondellBassell Industries has a detailed plan to permanently shutter its 263,776 bpd Houston refinery I in the first quarter of 2025. This plant closing marks the latest in announced U.S. refinery closures as motor fuel demand is expected to peak during this decade and decline due to competition from renewable fuels and electric vehicles. Lyondell plans to run the Houston facility at 90 percent of capacity for the remainder of the year.

Phillips 66’s 139,000 bpd Los Angeles refinery will cease production by the end of 2025.

Valeo’s CEO Lane Riggs stated that “all options are on the table” for the company’s 91,300 bpd Wilmington and 145,000 bpd Benicia, Calif. refineries. New California laws for maintaining emergency inventories would penalize operators and make their refineries unprofitable, as stated in Valero’s filing with the U.S. Securities and Exchange Commission.

Evergy plans to build two new combined cycle gas plants in Kansas. The two 705 MW units, one in Sumter County and the other in Reno County, would come online in 2029 and 2030, respectively. The plants would cost more than $2 billion in total to build and would have life spans of 40 years.

The demand for electricity rising in much of the United States is driven by new manufacturing facilities for batteries, semiconductors chips and data centers.

“Kansas is experiencing record economic growth, and Evergy is prepared to deliver the reliable, affordable and sustainable energy needed,” states Energy President David Campbell.

Data Centers and Power Generation

The increasing demand for power generation as a result of increased data center construction that demands a consistent source of energy has ignited a renaissance of the nuclear power construction industry. Microsoft will buy nuclear power for its data center needs from a reopened plant: a $1.6 billion revamp and startup of Unit 1 of the Three Mile Island plant in Pennsylvania.

Amazon Web Services, the tech firm’s cloud computing unit, entered a new deal with the Energy Northwest public utility consortium in Washington state for 300 MW of power from four advanced small reactors (SMRs) to start, with an option to increase it to 960 MW.

Amazon also signed an agreement with Dominion Energy to explore an estimated 300 MW SMR project near the existing North Anna nuclear power plant in Virginia. The Amazon unit is also leading a $500 million funding round for X-energy, its SMR technology firm.

Google announced a purchase agreement with Kairos Power for power set to come from up to seven SMRs that would generate 500 MW by 2035, with the first coming online as soon as 2030. It cited the 24/7 need for zero-carbon data center power, with demand amplified by AI.

Port of Montreal strike

Pricing and availability of commodity carbon steel butt-welding fittings and forged steel flanges remain stable as of this writing. Both domestic and offshore manufacturing and suppliers continue to cope with increasing labor cost, currency fluctuations, increasing energy cost, regulatory costs, increases in port handling charges, transportation costs and geopolitical uncertainties.

Dockworkers at the Port of Montreal have started a new strike, shutting down two container terminals at the country’s second-largest port with no end date as of this writing. 

This could be a precursor to ILA reaction if the final negotiation and ratification of the tentative agreement for the U.S. East and Gulf coast scheduled for Jan. 15, 2025, is not achieved.

It is, therefore, 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

The PVF Roundtable Golf Tournament was rescheduled for Dec. 9, 2024. The turnout and success of the tournament will be addressed in the January article as the event has not been held as of this writing.

The Dec. 10 Networking Meeting of the PVF Roundtable includes the Christmas Party and Casino event along with the PVF Young Professionals Annual Toy Drive to be held at The Bell Tower on 34th.

This is the last meeting to be held at this venue. All future meetings and events will be held at our new venue: Bayou City Event Center, 9401 Knight Rd., Houston, 281-501-6720.

The next meeting of the PVF Roundtable will be the very popular Cocktails & Commerce event, Feb. 11, 2025.

Our new venue will provide additional space and convenience to exchange information, meet new colleagues, and offer opportunities to network with manufacturers, suppliers and end-users. 

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

The pending (as of this writing) retaliation by Iran using more powerful warheads for Israel’s attack, other geopolitical uncertainties in the world today — the war in Gaza, Israel’s attacks on Hezbollah in Lebanon and Iran, the Houthi attacks in the Red Sea shipping corridor, conflicts with China/North Korea in the Pacific, the alliance with Russia, China and North Korea — and the potential impact they present to the PVF sector gives reason for concern. 

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