US demand to rise 6.2% annually through 2016
US demand for large diameter pipe is projected to rise 6.2 percent annually through 2016 to 197 million feet. For the purposes of this study, large diameter pipe is defined as pipe with a diameter exceeding 15 inches. Large diameter pipe sales increases will be due primarily to the deteriorating water and wastewater networks. Many pipe projects were put on hold during the 2006-2011 period due to state and municipal budget concerns. However, spending on public infrastructure projects by states and municipalities is expected to improve going forward, which will stimulate pipe demand. Additionally, the need to expand oil and gas transmission lines will benefit advances. Demographic trends will also impact demand, as the US population continues to migrate toward the less developed South and West regions of the country.
In value terms, demand for large diameter pipe is forecast to grow 7.1 percent per year to $9.8 billion in 2016, reaching a total weight of 35 billion pounds. Price increases will decelerate from the growth seen over the 2001-2011 period, as the cost of raw materials -- such as cement, metals, and plastics -- is expected to moderate.
Storm & sanitary sewers to remain largest market
Sewers, which include both storm and sanitary sewers, will continue to be the leading market for large diameter pipe through 2016, accounting for one-half of total demand. Sanitary sewers will be the faster growing of the two sectors, benefiting from the need to repair and replace public infrastructure. Gains in large diameter storm sewer pipe will come in large part from the US population migrating toward the less developed South and West regions of the country. Additionally, Environmental Protection Agency (EPA) mandates will provide opportunities for growth, as regulations regarding combined sewer overflows have become more stringent.
Drainage to be fastest growing large pipe market
However, the large diameter drainage market will experience the most robust growth through the forecast period, benefiting significantly from the rebound in building construction expenditures. Advances in the oil and gas market will arise primarily from line pipe applications in unconventional sources, such as in shale plays. Because the infrastructure surrounding shale wells has not been fully developed, many plays utilize trucks to transport material. Pipelines, which provide a continuous flow of product, are a significantly cheaper option.
HDPE to become leading large diameter pipe material
HDPE pipe will post above average gains as it continues to replace other materials in many applications, and become the top large pipe material in 2016. While steel was the leading large diameter pipe material in 2011, accounting for 31 percent of total demand, opportunities in the sizable oil and gas industry will spur demand, as steel is the preferred material in both line pipe and OCTG applications. Concrete will post the most rapid growth, as the material continues to benefit from its entrenched position in most water markets and its unmatched performance advantages in the largest diameter uses.