Page 10 - ITAtube Journal 2/2019

10
Market information
Figure 3: Oil Price Development in 2019 - Source: Nasdaq
dependant on political interven- tion, it has become very dif cult to give reliable forecasts for the consumption of steel tubes and pipes for this important market segment. Only agile management strategies can counter such chal- lenges.
The second OCTG market is repre- sented by oil and gas pipelines. The line pipe market is a pro- ject-based business with long planning periods and strong polit- ical determining factors. Several such projects are currently being planned in Europe, the US and Asia.
In Europe, gas pipelines are mainly built to carry gas from gas and oil elds in Russia. A major US project, the new “Keystone XL” pipeline, is planned to transport oil from Canada to US petrochem- ical centres. In Asia, pipelines are needed to serve the new petro- chemical complexes in Malaysia and Indonesia. All these projects are intensively discussed on polit- ical and environmental platforms.
The European project “Nord Stream 2” is a good example (Fig.4), since US president Donald Trump and the Polish government are using all their in uence to ban this project. The US administra- tion is even trying to threaten the international companies involved with trade sanctions.
On the other hand, the US pipeline project “Keystone XL” (Fig.5) is supported by Mr. Trump, although environmental activists continue to ercely oppose the project.
Again, the political issues at play make it more and more dif cult to predict pipeline project develop- ments in the oil and gas business.
Since January 2018, pipe prices have risen, as re ected in the climb of the pipe price index by about
23% from 288 to 353. (Fig.6) The positive signals throughout 2018 have also resulted in cautious optimism, with traders beginning to restock in expectation of a further price rally.
Nonetheless, it must be noted that tube producers are still facing relatively low plant utilisation, at levels of about 62% for welded tubes and pipes < 16-inch diame- ter as well as seamless tubes and pipes. For welded pipes ≥ 16-inch diameter, utilisation levels are even lower, at about 35%. Here we certainly nd regional vari- ations, but the overall picture is quite alarming.
Thanks to trade sanctions and support of the local oil and gas sector, the US tube and pipe industry is recovering. (Fig.7)
US tube production has increased by a massive 4 000 ktons, meaning that even previously decommis- sioned tube plants have resumed production. This trend may only be sustainable if US-based tube producers make good use of this growthtrendandinvestinproduc- tivity and product quality, other- wise the fallout may be severe once trade barriers fall again. However, some 7 000 ktons of steel tubes and pipes are still imported into the US (Fig.8), which is on average a high import volume.
On the other hand, Europe and other regions also impose trade barriers to secure the national industry against imports from other parts of the world. So the tube and pipe market does need to cope with various political interventions, a circumstance which sometimes hinders strategi- cal management measures. At the last ITA conference in Düsseldorf, Frank Harms from the “Wirtschafts- vereinigung Stahlrohre” reported
Figure 4: Pipeline Project Nord Stream 2 - Source: Nord Stream AG
Figure 5: Pipeline Project Keystone XL Source: CTV News
ITAtube Journal No2/May 2019