Page 8 - ITAtube Journal 2/2019

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Pipe & Tube Market: Current factors
in uencing the present situation
Dr. Gunther Voswinckel – Update as per May 2019
Welcome once more to our regular presentation in which we discuss some of the worldwide economic factors in uencing the pipe and tube industry.
Analysts will have once again realized that forecasts on oil price levels may be completely overthrown by political intervention on the part of stakeholders. The gures show that US tube and pipe producers in particular were greatly advantaged by the resulting business trends on the oil and gas market. Increased pumping and exploration activities in that part of the world are currently primary driving forces. And if we are to believe the US experts, this will remain a constant all the way through 2019. Russian and European tube and pipe producers were also able to pro t, to a lesser degree, from this positive trend.
Several other economic factors affecting the tube and pipe industry are discussed here. Other tube and pipe markets such as the automotive (15%), mechanical engineering (9%) and building and con- struction industries (5%) are also attractive market segments for our sector.
Despite current turbulences, the world automotive market is characterized by steady growth of about 2% p.a. At the same time, the proportion of tubes used in auto design is steadily on the rise, meaning this market segment is becoming increasingly attractive.
The building and construction industry market is doing even better, growing by about 4% p.a. Here we see increasing competition between steel and tube structures and concrete elements. Lobbying activities may help to further enlarge the steel/pipe penetration for skyscrapers and bridges.
World production of steel tubes and pipes in 2018 evidenced a slight increase of 3% as markets stabi- lized further. In detail, growth of 13% is reported for the US, supported by political trade barriers for tubular products and the strong growth of the shale gas exploration industry.
For welded tubes below 406 mm diameter, gures showed a production increase of 5% in 2018; the US reported growth of 11% after exceptional gains in 2017 (+30%). For welded tubes of 406 mm or larger,
production gures in 2018 experienced an overall drop of 5%. The US bucked this trend with a remark- able production upkick of 19%.
In seamless tubes, 2018 saw production grow overall by 4%. The US – following a boom year 2017 (+69%) – reported continued growth at the lesser rate of 17%. Even India, with its smaller production capacity, was able to report notable production gains of 32%.
This is a remarkable trend change, with US tube production experiencing impressive growth for the second time in several years. It would appear that the US trade barriers policy is having an impact. However, it should be noted experts are cautioning that this effect may not be sustainable, since some of the tube production plants taken back online to serve the increased demand are most but obsolete.
Pipe prices meanwhile continue to climb, as re ected in the pipe price index which showed an increase of 25% in 2018. Competition in saturated markets is prompting minor investment in those tube markets that display growth. However, overall plant utiliza- tion is at a low level. Demanding high-tech products are the strategic targets rather than commodi- ty-grade tubes. Limiting factors are sometimes the available steel quality for strip, plate and billets, as well as tube plant infrastructure in terms of both machines and the applied quality standards.
Tube suppliers located in high-cost countries have successfully taken steps to counter the strong inter- national competition. As well as seeking to special- ize in products with higher technical requirements, they are globalizing into markets with increased demands, and streamlining productivity to reduce the costs of production. Agile digital solutions in the sense of “Industry 4.0” offer further opportunities to maintain success.
Finally, we also discuss the impact of currency 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 compensate suppli- ers for some of the disadvantages.
ITAtube Journal No2/May 2019
8