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We also discuss the impact of cur- rency exchange rates on the pipe market. A strong euro throughout 2017 and early 2018 was seen to cause export disadvantages. As the euro is currently falling again, markets should be able to com- pensate suppliers for some of the disadvantages.
The market for steel pipe sup- pliers is dominated by the OCTG industry (51%). Besides this, the automotive (15%), mechanical engineering (9%) and construc- tion industries (5%) are also strong market segments for the sector. (Fig.1)
Looking at global steel tube production as per Q3 2018, it is heavily dominated by PR China (55%), followed by ROW (17%). (Fig.2) Following 2 years of shrink- ing production, China was able to stabilize its dominant position in 2018. The US was able to signif- icantly increase its market share due to political measures taken by the Trump administration.
Let’s take a look first of all at the OCTG, oil and gas, market as the largest target of steel tube sup- pliers. This market is subdivided into, firstly, pipes used for oil and gas rigs, such as drill pipes, joints and casings, and on the other hand, line pipes to transport oil and gas.
There is a strong correlation between the oil price and the number of oil and gas rigs in oper- ation. (Fig.3)
After an extended period of stead- ily climbing oil prices – from early 2016 (US$30 /barrel) to October 2018 (US$85 /barrel) – the oil price fell back to US$52 /barrel in only 2 months, only to recover to about US$62 /barrel by Febru- ary 2019. This price volatility is
Fig. 1: Markets for Steel Pipe Industries in 2012
Source: ITAtube Journal/Wirtschaftsvereinigung Stahlrohre e.V.
Market information
Fig.2: Global steel tube production by region, Q3 2018
Source: ITATube Journal/Wirtschaftsvereinigung Stahlrohre e.V.
quite striking and a consequence of nervous reactions to the polit- ical measures taken. Without the current political interventions, the world would be facing an over- supply of oil and gas, a situation which in early 2018 caused some US experts to warn that prices could plummet, much as they did in 2014 following the first shale gas boom.
The International Energy Agency (IEA) backed up its warnings
with figures. The organization expected growth in oil consump- tion in 2018 of about 1.4 million barrels/day. At the same time non-OPEC countries, particularly the US, were expected to raise their pumping levels by about 1.7 million barrels/day.
Citigroup analysts went even further and predicted a hike in output by non-OPEC producers of about 2.2 million barrels/day.
ITAtube Journal No1/February 2019
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