Infrastructure bill pumping money into pipe projects

Plastic pipe producers are extruding as much product as they can, rushing to fill orders that were already in an upswing since the start of the pandemic and now rocketing further with the Infrastructure Investment and Jobs Act.

The historic federal legislation from President Joe Biden's administration earmarked $1.2 trillion to rebuild America's roads, bridges and rails; expand access to clean drinking water; improve access to high-speed internet; and advance environmental justice.

The $55 billion going to drinking water and wastewater infrastructure will be dispersed for projects that meet federal priorities, such as upgrading leaky distribution systems and removing lead service lines still delivering water to household and business faucets.

Some of the projects have started and most will be wrapped up in the next five years. PVC and high density polyethylene pipe producers are facing another flurry of orders after a dizzying couple of years brought on by the pandemic.

"Pipes inventories are very low. We can't make enough pipe to meet demand," Bruce Hollands, executive director of the Uni-Bell PVC Pipe Association, said in a phone interview. "The market is booming."

It has been since the beginning of COVID-19 lockdowns.

"Some people think a lot of municipalities had capital budgets with money in them and when the engineers worked from home, they focused more on those projects," Hollands said. "Now the infrastructure bill is continuing the drive to upgrade infrastructure."

Hollands heads the Irving, Texas-based trade group, which promotes the engineering and technical benefits of PVC products for drinking water, sewer and irrigation applications. The group says the pipes are durable, low cost and long-lasting, with demonstrated longevity of more than 100 years,

PVC pipes make up the largest share of new miles installed for both the water and wastewater markets, according to Boston-based Bluefield Research. The firm tracks pipes made from PVC, HDPE and molecularly oriented PVC (PVCO).

In 2022, Bluefield forecast PVC will have a 62.3 percent share of the miles of water pipe installed, followed by ductile iron at 26 percent, HDPE at 4.2 percent, steel at 3.8 percent, concrete and other at 1.8 percent each, and PVCO at 0.2 percent.

Developed as an improvement to conventional PVC pipe, PVCO pipe has more tensile strength for larger pipe diameters and lower flow velocities.

HDPE pipes, which are used mainly for potable service lines and wastewater projects, also have a service life of 100 years and are strong, flexible — which is popular in earthquake-prone areas — lightweight and leak-proof when fused together.

On the wastewater side, PVC pipe has a 48.6 percent share of the pipe miles installed, followed by HDPE at 24.3 percent, other at 11.5 percent, ductile iron at 10 percent, concrete at 3 percent and steel at 3 percent.

Overall, in 2022, 69.8 percent of the new pipe going into the ground for water and wastewater uses will be plastic pipe, Bluefield Research says.

"Plastic pipes are becoming the main choice now for new pipe installations," Lauren Balsamo, a municipal water analyst, said in a phone interview.

Sales are up 15 percent to an estimated $3.6 billion at JM Eagle, a Los Angeles-based manufacturer of PVC and PE pipe that is the No. 1 pipe, profile and tubing producer in North America, according to Plastics News' new ranking.

At Advanced Drainage Systems Inc. in Hilliard, Ohio, sales climbed 40 percent to $2.1 billion, making it the third-largest pipe, profile and tubing extruder in North America, the updated ranking says. Ipex USA LLC in Pineville, N.C., also saw a 40 percent increase in sales to an estimated $1.26 billion, placing it fifth in the rankings.

Other double-digit increases were seen at Dura-Line/US and Canada, Performance Pipe and WL Plastics. Sales at those companies increased 12-18 percent.

By 2030, the research firm shows the share of plastic pipe being installed at 74 percent.

"Price is a big part of it as well as materials becoming more advanced," Balsamo said. "With technological advances, the plastic pipes are becoming stronger and more durable. They're not just beneficial from a cost standpoint but from a longevity standpoint compared to when they first entered the market."

Early generations of plastic pipe could become brittle or had issues with joint quality or stress cracks, but materials and manufacturing methods have evolved to address the issues.

Ipex USA is part of Oakville, Ontario-based Ipex Group, which is investing up to US$150 million at three U.S. facilities and adding employees to meet new demand. Ipex Group, an Aliaxis brand and company, has 13 manufacturing facilities in North America, including three plants acquired in 2019 from Silver-Line Plastics Corp.

Twenty-eight new production lines will be installed at the former Silver-Line plants in Asheville, N.C.; Lawton, Okla.; and Fort Pierce, Fla. Two facilities each will be expanded by eight lines and one with 12.

"The demand for plastic pipe is growing in virtually every segment we participate in, and plastic pipe continues to displace tradition materials," Ipex Group CEO Alex Mestres said in an email, listing end markets for plumbing, industrial, electrical, water well, irrigation and infrastructure.

The new lines use high-speed extrusion technology and include closed-loop wall monitors, end-of-line pipe bundling automation and gravimetric feeding systems. The wall monitor is an automated control system to regulate the extrusion process, increase efficiency and ensure the highest-quality product.

The capacity expansions will create 50 new jobs across the three sites and include a significant investment in automation.

Ipex's future growth plans include additional distribution centers in the southern and western United States to improve service.

Fergus Falls, Minn.-based PVC pipe manufacturer Otter Tail Corp. hit record results for the quarter that ended March 31, as demand outstripped supply.

Although resin production improved following the 2021 winter storm that hit Texas, resin prices didn't come down, according to a company news release. The price hikes that were passed on to pipe buyers were equivalent to a 125 percent increase in the price per pound of PVC pipe sold compared with the first quarter of the prior year.

"This price increase exceeded the 52 percent increase in the cost of PVC resin and other input materials," the release says. "The increase in sale prices was primarily due to continued strong demand for PVC pipe products and limited PVC pipe inventories. The unique supply and demand market conditions in the first quarter of 2022 were a continuation of the market dynamics experienced throughout 2021."

The North American PVC pipe sector has renewed its 2015 Environmental Product Declaration and will be publishing a revised EPD later in 2022 that complies with ISO 14025 standards and was independently certified by global health organization NSF International.

There has been an overall 6 percent reduction of embodied carbon and most other environmental impacts compared with the 2015 study thanks to improvements in PVC pipe manufacturing and upstream production of PVC resin, according to Uni-Bell.

"The 2015 EPD already established that PVC pipe was the piping material with the lowest carbon footprint and the 2022 study reconfirms this," Hollands said.

There was also a 20 percent reduction in electricity use during the extrusion process as well as a 66 percent reduction in water use during PVC pipe manufacturing. Electricity is the dominate driver in manufacturing, the trade group said, so any reductions here are significant for the manufacturing stage.