Pipe Price Increases for 2004

Recently, we received notification from our vendors of the potential for pipe price increases similar to what we experienced this same time last year. This year the economy is in better shape and some of the increases may stand. Some of the reasons for the increase are stated below and were communicated to us from a correspondence received from Allied Tube & Conduit, a major supplier of steel pipe.

Freight

Effective January 4, 2004, the trucking industry is implementing new hours of service. Waiting time is now counted as actual driving time. It is predicted that this will add 4 - 7% more to freight costs. Also, starting in January, additional port security due to anti-terrorism legislation and the recent upgrade to high alert status may also add to freight costs.

Steel

We are told that producers are booked with orders through March. Tight supply conditions may result in higher prices. Coke used to manufacture steel and scrap steel may be in short supply.

Future Increases

We have been quoted on average 6 - 8% increases for January, and another 6 - 8% increase for February.