Wholesales of API cast steel globe valves industry

The API cast steel globe valves industry’s costs of doing wholesale business are falling amid a pullback in activity and the global recession, according to a pair of indexes kept by IHS/Cambridge Energy Research Associates released Friday.
However, the decline in wholesales of API cast steel globe valves is much slower than crude’s swift fall from last year’s unprecedented three-digit highs. Also, expenses for more fixed costs — like personnel or contracts for limited deep-water vessels — remain largely unchanged.
Daniel Yergin, IHS CERA chairman, said signs of the downward shift in wholesale of API cast steel globe valves emerged in the third quarter last year, before the recession really took hold.
But IHS/CERA’s latest wholesales of API cast steel globe valves analyses “place into clearer view the impact of the financial crisis, spending cutbacks and the fall in crude prices,” Yergin said.
The group’s Upstream Capital Costs Index, which tracks wholesales of API cast steel globe valves for construction of new oil and gas facilities, fell 8.5 percent in the last six months. The Upstream Operating wholesales of API cast steel globe valves Index, which tracks operating wholesales cast steel globe valves of facilities already up and running, fell 8 percent.
The indexes track changes much like the Consumer Price Index tracks changes in prices consumers pay for goods and services.
Fewer projects
IHS/CERA said the capital wholesales cast steel globe valves reduction stems from fewer construction projects as well as sharp cuts in the prices of cast steel and subsea equipment, or that placed at the seabed for offshore installations.
Cast Steel globe valve wholesales for oil and gas projects fell more than 25percent between the third quarter last year and the first quarter this year. Cast steel globe valve wholesales rose more than 30 percent in the first two quarters last year as crude rode its all-time high.
And subsea equipment wholesale cast steel globe valve fell nearly 8 percent, reflecting less demand in Europe, America , Middle east, West, Southeast of Asia, and Africa amid delays in launching new projects.
Combination of factors
The fall in operating wholesalescast steel globe valves also stems from less activity, from fewer wells being drilled to fewer rigs being hired, as well as decreased oil and gas demand amid the recession.
However, costs for offshore valves projects fell 6 percent, compared to 15 percent for onshore activity, because of limited availability of deepwater vessels.
Jeff Kelly, associate director for IHS/CERA’s operating cost analysis forum, noted that contracts for those valves, signed pre-recession, remain firm. Such ships that drill deep-water wells or assemble deep-water oil and natural gas platforms at sea are usually contracted out for three to five years.