Page 8 - ITAtube Journal 1 2024

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Tube & Pipe Market: Factors influencing the current situation
Dr. Gunther Voswinckel – Update as per April 2024
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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 Russian invasion into the Ukraine
in 2022 and its consequences are still creating challenges for the industry. The war between Hamas and Israel recently started October 2023 is another conflict threatening the world. So far, no conse- quences on the energy prices are to be seen since all involved parties manage to keep this conflict local without inter- ference to other middle east countries. Increasing tension between the US and China officials create further clouds for free international trade. Political inter- ventions and regulations are increasing- ly influencing industrial strategies and actions.
The necessary transition to environ- mentally friendly and carbon reduced production became a central mission of the industry. The consequences on the cost increases are unevenly distributed across the world. Europe is challenged by persistently high energy prices and levies on carbon intensive industries. Re- gions such as the USA, India, Turkey and China are benefiting from lower energy cost. The high level of public debt caused by the expensive measures taken to overcome the various crisis in recent years give rise to fears that the central banks’ effectiveness in combating infla- tion will be limited and that the target value of 2% can therefore not be expect- ed in short term. All these unexpected challenges are difficult to manage.
Many tube and pipe producers were able to report improved profits in 2023, but in Europe high energy prices and CO2 levies are weighing on tube and pipe producers. Due to the dynamics of these developments, it is usually very difficult
for the producers to react appropriately. Some manufacturers are losing confi- dence to compete on the global market with these additional costs and conse- quently even reduce their involvement in Europe. As a result, some countries/ 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 consider- ations as well as current and future en- ergy costs are increasingly taking centre stage. All sources of supply are being critically scrutinised, and one can only hope and warn that international 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-in- tensive steel as well as tube and pipe industry.
However, disruptive times also always create new opportunities for economic success. New markets such as carbon capture utilisation and storage (CCUS), new networks for hydrogen transpor- tation, electromobility and productiv- ity improvements at production sites
as part of the transformation towards more environmentally friendly plants of- fer opportunities that should be seized.
Availability of economical energy is a deci- sive factor for the industry. Geopolitical turbulences and political regulations have changed the regional balance with increas- ing challenges for the industry in regions with higher energy cost. This may change the industrial landscape of the energy intensive industry with significant future consequences.
The prices for electrical energy in Europe, after turbulent periods, is now reported at a level of about 70 €/MWh with remarkable
ITAtube Journal April 2024