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will not be able to continue to ignore inter- est rate hikes. Hints from the European Central Bank lead us to expect the first interest rate hikes this summer. It is to be expected that other central banks besides the Fed will also feel compelled to make high interest rate hikes, which could then have a negative impact on the economy and thus lead to an increase in unemploy- ment. Stagflation is the economical conse- quence due to the present situation of high inflation in combination with small or no economic output growth.
If we look at the European pipe market
as an example, so far about 20% of pipe imports have been served by Russia and the Ukraine. In the case of seamless pipes, the import share from Russia and Ukraine was even as high as 40%. These volumes need to be supplied by other tube and pipe producers. Russian shipments in 2022 will decrease by 34% on-year to 1.06 million tonnes, the RBC newspaper reports, citing a presentation from fund director Alexander Semenchishin. Domestic consumption in Russia is seen decreasing by 2% on-year in 2022 to 9.12mt. As a result, pipe production will fall by 5.5% to 10.04mt. Many regions of the world such as Europe and North America need to compensate their pipe and tube imports from Russia and Ukraine.
As a result of the increased demand and the lower supply of pipes, pipe prices have risen by more than 50% compared to the previous year 2021 (Figure 7) and possibly may climb even further this year.
Figure 8 shows some current high pipe prices in the USA and the import prices
for pipes in Europe. The Chinese welded pipe production decreased in April 2022 by about 16,5%. In this context it is remark- able, that Chinese tube producers try to attract with low prices to compensate their actual burdens of delivery bottlenecks, high transport costs to and import duties in the relevant regions.
Most pipe and steel producers were able to report strongly improved figures for Q1 2022 in the wake of the price increases. However, for European pipe producers, the additional CO2 costs agreed to be imposed
ITAtube Journal June 2022
Figure 7: Producer Pipe Price Index as of 24. May 2022 Source: US Energy Information Administration
Figure 8: Price range as of May 2022 for some selected tubular products
Source: various
Market information
Figure 9: Vallourec Tube Mill in Saint-Saulve Source: Vallourec
by the European Community represent another major challenge. Confidence in being able to compete on the world market in the future with these additional costs is dwindling among some tube producers. Vallourec, one of the largest producers
of quality tubes, reported losses in the first quarter of 2022 and at the same time announced the closure of its traditional plants Saint-Saulve in France (figure 9)
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