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Market information
Dr. Gunther Voswinckel, VOSCO GmbH
Pipe & Tube Market – some in uencing
factors on the present situation
Dr. Gunther Voswinckel – Update as per June 2018
At the end of June 2018, oil prices climbed to a 2 year high of 77 US$/barrel. Compared to 2016, the price of oil had signi cantly recovered in 2017 and this trend continues in 2018. This is on the one hand a consequence of reduced oil pumping by OPEC and their partners by about 1.8 Mio. barrel/day, and on the other hand due to the increased world market demand for oil. However, prices remain volatile and some US experts are even warning that the current situation bears similarities to the rst shale gas ood offensive in 2014, when oil prices plummeted from 110 US$ down to 30 US$/barrel.
The International Energy Agency (IEA) backs up its warnings with gures. The IEA expects oil consump- tion growth in 2018 of about 1.4 million barrels/day. At the same time it expects that non-OPEC countries, particularly the US, will raise their oil pumping levels by about 1.7 million barrels/day. Citigroup analysts are even predicting a hike in output by the non-OPEC producers of about 2.2 million barrels/day. If the IEA and Citigroup are correct in their assumptions, the world could face an oversupply of oil, with attendant consequences for the tube and pipe industry.
However, despite these assumptions oil prices con- tinue to climb, due largely to recent action taken by the US government. Since US President Trump announced further sanctions on oil-producing giants Iran and Venezuela, including measures to shut down oil exports, the world market has reacted to fears of a new shortage of oil and the upward trend in oil prices continues. Meanwhile, it is remarkable how the US oil and gas industry is taking advantage of the political sanctions being imposed by the US gov- ernment, and US exports have surged. In this pres- entation, several other economic consequences for the tube and pipe industry are discussed. Tube and pipe markets such as the automotive, building and construction industry are attractive market segments for our industry and we look at developments there.
World production of steel tubes in 2017 showed a slight increase of 1% as the markets stabilized. In detail, growth of 34% was reported for the US, sup- ported by political trade barriers for tubular products and the strong growth of the shale gas exploration industry due to booming oil prices.
For welded tubes below 406 mm diameter, a small overall production decrease of 2 % was registered for 2017, although the US reported growth of 34 % after major losses (down 18 %) in 2016. In contrast, China registered a downturn of 10 %. For welded tubes of 406 mm or larger, 2017 production was down by 7 % overall. But Europe showed remarkable buoyancy and production growth of 47 %. For seam- less tubes, 2017 saw production grow overall by 8 %. Even the US, after a moribund year 2016 (-22 %), reported an increase of 74 %.
Overall, the gures illustrate a remarkable change in trend, since now for the second time in several years, the shift of tube production capacity to China has been reversed in favor of the US and Europe. It would seem that the trade barriers policy is having an impact. Meanwhile, overcapacity is leading to further consolidation in the steel tube industry. The pipe price index, which rose from 260 in January 2017 to a high of 292 in January 2018, has con-
Fig. 1: Markets for Steel Pipe Industries in 2012
Source: ITAtube Journal/Wirtschaftsvereinigung Stahlrohre e.V.
ITAtube Journal No2/July 2018
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