Page 8 - ITAtube Journal 1 2022

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Tube & Pipe Market: Factors influencing the current situation
Dr. Gunther Voswinckel – Update as per March 2022
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Welcome to ITA’s and VOSCO´s regular presentation of the main worldwide eco- nomic factors influencing the tube and pipe industry.
In this article we discuss several eco- nomic consequences for the tube and pipe industry. In many regions of the world, the 4th wave, Omicron, of corona pandemic is striking the communities. Due to intensive vaccinating, worst consequences seem to be brought partly under control.
In the latter months of 2021, we wit- nessed an impressive restart of the industry. The demand for energy is booming whereas the supply chains are still seriously disrupted. International expenditure programs, established to counteract the economic consequences of the pandemic, flooded the markets with money. And so, after a long period of financial stability, we now see signs of upcoming inflation. In consequence national banks start to cut back their expenditure programmes.
On February 24th, 2022, the Russian army started the invasion against its sovereign neighbour Ukraine. The invasion ordered by Russian President Vladimir Putin represents an escalation of the Russian-Ukrainian war that has been simmering since 2014 by extending it to the entire territory of Ukraine. As countermeasure hard sanctions were imposed on Russia. In consequence the prices for energy, gas and oil, ballooned to unknown highs with significant effect to our industry. The entire Ukrainian tube industry was shut down and some tube mills in other territories were also suspended due to the unaffordable energy costs.
So far, the world economic system and structures were based on relatively free trade and the idea that economic
networks prevent from warlike activi- ties. This world-view is being put to the test with unforeseen consequences for global free trade.
However, the reconsideration of the world oil and gas supplies will not only provide new challenges to our industry but also possible chances for future busi- ness.
After a disastrous 2020, characterized by shrinking market demand, some tube and pipe producers closed their produc- tion facilities. By contrast, 2021 has been defined by increased demand, followed by an enormous price and cost rally combined with deficits in the supply chains. The price and cost surges peaked in fall 2021, although supply chains and energy costs still present challenges. However, the market in principle pro- vides enough tube and pipe producing capacity to serve the demand, and so will likely calm down as soon as demand and supply can be balanced again.
Still, energy costs will remain challeng- ing for high energy consuming industries like the steel tube and pipe industry. Possible consequence may be the migra- tion of high energy consuming industries to lower cost regions. Producers with unique production advantages may counter such trend.
Strategic measures for our industry are consequently quite demanding. Lean and agile organizations with flexible, custom- er-orientated production facilities as well as adequate agile purchasing strategies are the best answer to demanding and volatile market requirements. Agile digital solutions in the spirit of “Industry 4.0” offer further opportunities to stay suc- cessful.
The International Tube Association organized several well attended webinars
ITAtube Journal April 2022