Page 13 - ITAtube Journal 1 2024

Market information
Inflation rate, which was considered as a major thread to economic growth seems to calm down in most parts of the world. The efforts of the central banks, especially these of the US FED, has stopped the galloping inflation 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 (Figure 11).
Besides the inflation rate, the producer price index is another important parameter for the economic efficiency, as it reflects the costs of the manufacturing industry. As Figure 12 shows, these costs vary greatly from region to region. Europe and the USA have aligned to a similar level due to the falling energy costs in Europe. China’s cost situation is still particularly advantageous with an advantage versus Europe and the USA of about 25%. Japan as well has an advantageous situation in comparison to the USA and Europe of about 16%. Labour unions in the USA and Europe are currently concluding their wage rounds with signifi- cant wage increases, meaning that further increases in producer prices are expected. In Europe, the high energy prices must also be considered if these cannot be signifi- cantly reduced in the short term.
The major driver of the tube and pipe industry is the OCTG market representing about 51% of the world tube and pipe pro- duction. The consumption of OCTG tubes directly relates with the oil price (see pre- vious tube market reviews). OPEC+ during the past months have tried to keep the oil price at a minimum level of 90 USD/Bbl. by voluntary supply cuts. The USA on the other hand tried to balance the possible supply shortages by additional own supplies. These measures kept the Oil price mostly
in a range of 70 to 90 USD/Bbl. (Figure 13). Therefore, under normal conditions, the World bank projects the oil price to stay at 80 USD/Bbl. in 2024. This projection cer- tainly only applies if the war between Israel and Hamas remains local.
World Bank on the other hand sees sig- nificant influence on the oil price if the Hamas-Israel war would escalate into a Middle East wide conflict disrupting the oil supplies.
ITAtube Journal April 2024
Figure 12: Growth rate of the producer price index in selected countries January 2020 to November 2023
Source: Trading Economics/Statista.com
Figure 13: Oil price WTI development 1 year up to 14th of March 2024 (US$/Bbl) Source: US Energy Information Administration
Since it seems that all involved parties are trying to keep the conflict local and avoid any escalation, it can be assumed that the oil price stays at present level. Frightening scenarios like that in 1973 with disruptive impacts on the global economy a sudden four-fold increase in crude oil prices usher- ing in the higher inflation and rising unem- ployment that ended the long post-war boom in the global economy, as displayed by some world bank specialists’ forecasts seems to be out of sight.
The USA to soften the inflation and to sacrifice the crude oil demand enlarged its crude oil production almost linear from
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