Page 12 - ITAtube Journal 1 2023

Market information
Figure 9: Russian Steel Tube and Pipe imports into the EU (1000 tons)
Source: ESTA
production, whose capacities need to be replaced as well.
For international trade most of the supply chain bottlenecks disappeared and the freight rates normalized. Inflation seems
to have passed its maximum and shall further decline until 2024. The affords of the central banks, especially these of the US FED, has stopped the galloping infla- tion and reversed the trend. Due to the high indebtedness of the central banks, however, it must be feared that the target inflation of 2% will not be reached for some time yet.
Besides the inflation rate, the producer price index is another important parameter for the economical efficiency, as it reflects the costs of the manufacturing industry. As Figure 10 shows, these costs vary greatly from region to region. Europe brings up the rear due to the sharp rise in energy costs. The USA has compared to Europe
a significant advantage of more than 16% due to cheaper local energy. China’s cost situation is particularly advantageous with an advantage versus Europe of about 48% and the US of about 32%. Japan as well has an advantageous situation. Unless Europe finds again sustainable reasonable energy supplies, this cost disadvantage can hardly be bridged in a short time.
The major driver of the tube and pipe industry is the OCTG market represent- ing about 51% of the world tube and pipe production. The consumption of OCTG tubes directly relates with the oil price (see previous tube market reviews).
The geopolitical sanctions against Russia
in 2022 created a massive contraction of Russian oil production causing speculative price increases until mid-2022 (Figure 11). To sacrifice the supply shortage and to limit the inflationary consequences of the energy supply gap exploration companies initi- ated massive drilling activities. OPEC-plus boomed its crude oil production in only
2 months starting in February 2022 from 37 Mio. Bbl./day to 38 Mio Bbl./day. The USA to soften the inflation and to sacrifice the crude oil demand enlarged its crude
ITAtube Journal May 2023
Figure 10: Growth rate of the producer price index in selected countries
Source: Statista
Figure 11: Oil price WTI development 1 year up to 19th of April 2023 (US$/Bbl)
Source: US Energy Information Administration
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