Page 8 - ITAtube Journal 1 2023

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Tube & Pipe Market: Factors influencing the current situation
Dr. Gunther Voswinckel – Update as per May 2023
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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.
The corona pandemic is under control. The supply chains were mostly restored. The Russian invasion into the Ukraine in 2022 and its consequences are major challenges for the industry. Increasing tension between the US and China offi- cials create threatening clouds for free international trade. Political interven- tions and regulations are increasingly influencing industrial strategies and actions.
The transition to environmentally friendly and carbon reduced produc- tion became a central mission of the industry. The consequences on the
cost increases are unevenly distrib-
uted across the world. Europe, which was highly dependent on competitive Russian gas and oil supplies, is chal- lenged now by persistently high energy prices and high industrial producer costs. Regions such as the USA, India, Turkey and China are benefiting from lower energy and industrial producer cost. In addition, high inflation and its countermeasures threaten our industry and present it with unexpected chal- lenges difficult to calculate. The high level of public debt caused by the expen- sive measures taken to overcome the various crisis in recent years give rise
to fears that the central banks’ effec- tiveness in combating inflation will be limited and that little improvement can therefore be expected in the short term.
As always in such disruptive times, we see crisis winners who maximise their profits - but also crisis losers who have to fear for their existence. Due to the
dynamics of these developments, it is usually very difficult for the crisis losers to react appropriately. As a result, some regions are looking for suitable political countermeasures to compensate for their cost disadvantages.
Whereas previously only quality, deliv- ery time and costs were decisive, now geopolitical and logistical risk consid- erations as well as current and future energy costs are increasingly taking centre stage. All sources of supply are being critically scrutinised, and one
can only hope and warn that interna- tional trade will not suffer too much
as a result. In particular, the regional differences in energy prices will have an impact on the current landscape of the energy-intensive steel and tube indus- try.
More than 70 % of total world pipe pro- duction, i.e. about 110 million tonnes, are welded pipes. Welded pipes are highly dependent on hot-rolled coil prices and large OD pipes, on plate prices. Average prices for hot-rolled coils declined from June 2022, from around USD 1500, to a minimum of USD 650 in December 2022. Since then, the prices went up again to USD 1300 this March 2023. Today, end of April 2023, the price for hot-rolled coil averages to about
USD 1100. This price volatility poses major challenges to our tube industry. Although tube prices are still high, the demand for tubes calmed down with similar effects on prices. The high price for hot-rolled coils therefore leads to an erosion of margins for welded tubes. It remains quite difficult to forecast prices for hot-rolled coils. Prices for unalloyed commodity pipes in Europe are cur- rently around 800 USD/tonne, result- ing in a value added of only about 200
ITAtube Journal May 2023