Updating the US’ Aging Infrastructure Means Opportunity for Pipe Suppliers

Demand for pipe in the US is projected to climb 2.9% per year through 2024 to $47.4 billion, according to a new Freedonia Group analysis. Advances will be driven in large part by increased spending on water and sewer construction and ongoing efforts to replace aging pipelines in the US, where much of the pipe currently in service is near the end of its useful life, or (in many cases) well beyond it.

For instance, America’s Water Infrastructure Act of 2018 (an update of which is pending in the Senate) has already funded several billion dollars in much needed improvements to the US potable water supply and wastewater disposal infrastructure, but more work is needed, as the country addresses:

On the other hand, a weaker economic outlook – restrained by the ongoing COVID-19 pandemic – will depress construction and oil and gas drilling activity for some time, constraining demand in these major applications for pipe. Below are some of the key trends to watch in the US pipe market through 2024.

Pipe Markets Benefiting from Increased Infrastructure Funding

The American Water Works Association estimates that it will cost at least $1 trillion over the next 25 years to restore and expand the country’s water infrastructure. Investment in this infrastructure has been underfunded for decades, as local, state, and federal governments have failed to supplement the revenue generated by water rates – the largest source of water infrastructure funds.

Due to rising investment to replace aging infrastructure, potable water and storm/sanitary pipes are expected to register among the biggest increases in demand through 2024:

  • Potable water pipe demand is forecast to reach $9.4 billion in 2024, supported by government measures to fund water infrastructure projects through the EPA and USDA. If enacted, America’s Water Infrastructure Act of 2020 would invest $19.5 billion in such projects as repairing wastewater and irrigation systems and improving flooding protection.
  • Storm and sanitary sewer pipe demand is expected to hit $7.1 billion in 2024, driven by the growing urgency of wastewater infrastructure upgrades. Sewer maintenance and expansion projects are frequently given low priority by state and local budget officials, but more leakage ruptures will occur as the systems continue to age, necessitating repair or replacement.

Weakened Construction Outlook Hinders Growth in the Drain, Waste, & Vent Pipe Market

Demand for drain, waste, and vent pipe is forecast to reach $1.4 billion in 2024 as plastic pipe continues to capture market share from more traditional metal pipe materials, and rising plastic pipe prices boost market value. However, the COVID-19 pandemic is expected to have a particularly severe impact on the building construction industry, the primary driver of demand for drain, waste, and vent pipe (DWV).

Though construction projects were considered “essential” businesses in many cases during the March to May 2020 shutdowns, consumers’ and businesses’ ability to finance new housing and commercial projects is expected to be limited for at least 2020, and perhaps longer. Nonresidential building construction, for example, is not expected to return to 2019 levels by 2024.

Nevertheless, home renovation activity may support DWV pipe sales to a degree, as many consumers have increased spending on home improvement projects as a response to pandemic-related restrictions.

Changing Consumer Behavior Amid COVID-19 Gives Boost to Structural & Mechanical Pipe Market

The COVID-19 pandemic has also altered consumer behavior and shopping patterns, and a number of these shifts are expected to continue after the pandemic ends, which will support demand for pipe-intensive home appliances:

  • Consumers are expected to continue to cook at home more frequently and purchase larger quantities of groceries while making fewer trips to supermarkets, encouraging them to increase their storage by upgrading to larger refrigerators. Demand for commercial refrigerators will also increase as food retailers continue to expand their curbside pick-up programs.
  • Aging air conditioning units will be replaced as consumers spend more time at home and make improvements to these residences.

Want to Learn More About US Pipe Markets?

Pipe Products & Markets, Plastic Pipe, and Drain, Waste, & Vent Pipe are now available from The Freedonia Group.

About the Author:

Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.