Page 8 - ITA Journal 3-2018

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Pipe & Tube Market:
current factors in uencing outlook Dr. Gunther Voswinckel – Update as per October 2018
Welcome to our regular presentation of the main worldwide economic factors in uencing the pipe and tube industry.
The largest tube and pipe consuming market segment accounting for about 51 % of total consumption is the oil and gas industry.
In October 2018, oil prices climbed yet again to a 4 year high of 85 US$ / barrel. This is a consequence on the one hand of the US sanctions imposed on Iranian and Venezuelan oil and gas exports, and on the other due to the increased world market demand for oil. Regular oil price hikes were offset only by a short period of falling oil prices in early February 2018, despite the fact that in early 2018, some US experts were warning that prices could plummet much as they did in 2014 following the rst shale gas boom.
The International Energy Agency (IEA) backed up its warnings with gures. The organization expected growth in oil consumption in 2018 of about 1.4 million barrels/day. At the same time non-OPEC coun- tries, 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.
If the IEA and Citigroup are proved to have predicted correctly, the world could be faced with an oversup- ply situation.
However, political intervention by the US govern- ment, i.e. the sanctions imposed on Iran and Vene- zuela’s oil exports, have created an arti cial mood of supply shortages, which in turn prompted the current oil price rally. Analysts will have once again realized that forecasts on oil price levels may be completely overthrown by political intervention on the part of stakeholders.
Several other economic consequences for the tube and pipe industry are discussed in the presentation. Tube and pipe markets such as the automotive (15 %) and building and construction sectors (5 %) are also attractive market segments for our industry.
The world automotive market is characterized by stable growth of about 2% a year. At the same time, the proportion of tubes used in auto design is stead- ily on the rise, causing increased attractiveness of this market segment.
The building and construction industry market is doing even better, growing by about 4 % a year. This market segment is also characterized by a steady increase in proportional penetration of tubes and tubular pro les.
World production of steel tubes extrapolated from the second quarter of 2018 showed a slight increase of 2 % as the markets further stabilized. 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 show a second quarter production increase of 4 %; the US reports growth of 13 % after gains in 2017 (+ 30 %). On the other hand, ROW is facing a decrease of 2 %.
For welded tubes of 406 mm or larger, second quarter 2018 gures once more showed production fell by 3 % overall. But CIS (+ 24 %) and Europe (+ 8 %) showed remarkable production growth.
For seamless tubes, the second quarter of 2018 saw production grow overall by 1 %. The US, following a boom year 2017 (+ 69 %), reported continued growth at the lesser rate of 15 %. Only ROW suffered a serious downturn in 2018, with production rates down by 33 %. This is a remarkable trend change, with US tube production showing remarkable growth for the second time in several years. It would appear that the US trade barriers policy is having an impact.
Meanwhile, overcapacity in many regions of the world is leading to further consolidation in the steel tube industry. Pipe prices continue to climb, re ected in the pipe price index which showed an increase of 25 % through to August 2018. Competition in saturated markets is prompting minor investments in those tube markets that display growth. More demanding high-tech products are the strategic targets, rather
ITAtube Journal No3/October 2018
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