Page 9 - ITATUBE Journal 1 2020

The mechanical engineering market with its uncounted appli- cations represents many inter- esting segments for the tube and pipe industry, such as e.g. hydrau- lic cylinder tubes or ball bearing tubes. It can be expected that the investment in capital goods will slow down and be postponed to secure companies assets, anyhow the market will recover and may even become stronger like we have seen after the last financial crises.
The building and construction industry (5%) also represent an attractive market segment for our industry. The building and construction industry market is growing by about 4%/year. If the recession caused by the corona pandemic does not last long, this market may even be spared and not so negatively hurt. In this market we can see a competition between steel/tube structures and concrete elements. Lobbying activities are required, especially to further enlarge the steel/tube penetration for skyscrapers and bridges.
The tube and pipe price index weakened since September 2018 from 367 down to 339 in March 2020 (-8%). April figures are not yet published, anyhow it can be expected that tube and pipe prices will drop even more significantly.
In the high wage countries, demanding high-tech products are strategic targets rather than com- modity-grade tubes and pipes. Limiting factors are sometimes the availability of steel quality and quantity for strip, plate and billets as well as the tube plant infrastructure regarding machines and the applied quality standards.
Anyhow the still unpredictable consequences of the worldwide
corona pandemic, the trade con- flict between the USA and China, the instable political situation in many countries are creating an atmosphere that put pressure on our industry with great danger for a global economic recession.
Strategical measures for our industry are consequently quite demanding. Lean and agile organizations with flexible and customer orientated production facilities are adequate to prompt the demanding and volatile market requirements. Agile digital solutionsinthesenseof“Industry 4.0” offer further opportunities to stay successful.
In this column/article I would like to discuss some important seg- ments of the tube and pipe market.
These last weeks have really caused unforeseen consequences to the world. The corona pandemic starting in Asia, mainly in Wuhan and the Hubei province early Feb- ruary 2020, has meanwhile took control of Europe, the USA, and many other countries. It is even very likely that we will experience the corona roll out throughout the entire world. In consequence many countries have limited some substantial human rights, such as the freedom of movement as well as the freedom of property and the freedom of practicing an occupa- tion. Many countries have decided to lock down major parts of the public, industrial and private activities to protect human lives.
In this article I will not discuss the sad and disastrous conse- quences for the mankind (as of 21. April 2020 worldwide ab. 2,5 Mio. known persons in 185 coun- tries are infected by Covid-19 and about 165.000 persons have died
being infected by Covid-19). The latest epicentre being the USA with most infected (790.000) and killed persons (42.200). The comments on the human conse- quences of this sad catastrophe shall be made by analysts who are more expert in this field.
In the following will only concen- trate on the consequences for the tube and pipe industry.
Many countries have decided to lock down major parts of the industry. The international stock markets are flooded with huge amounts of financial support to avoid bankruptcy or unfriendly take overs. Some countries are trying to compensate the corona consequences with financial support also for mid-size and small entities. Major supply and service chains are not working any more. It will take quite some time to recover the well-established globalized production network. In the meantime, the consumption of energy and industrial goods has fallen apart. The tube and pipe industry, unless still protected by long-term delivery contracts is also hard hit by this global pan- demic.
The by far largest market segment for tubes and pipes is the OCTG (Oil Country Tubular Goods) industry with 51% market share (Figure 1).
The OCTG market is subdivided in pipes used for oil and gas explo- ration rigs, such as drill pipes, joints, tubing and casings and further downstream line pipes to transport oil and gas.
The OCTG tube and pipe consump- tion is heavily depending on the number of rigs, as well as the depth of drilling and the capacity of the rigs. The number of new oil and
Market information
ITAtube Journal No1/July 2020
9