Page 8 - ITAtube Journal 2 2022

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Tube & Pipe Market: Factors influencing the current situation
Dr. Gunther Voswinckel – Update as per June 2022
8
Welcome to ITA’s and VOSCO´s regular presentation of the main worldwide eco- nomic factors influencing the tube and pipe industry.
We are still suffering from the conse- quences of the Corona pandemic and its effects on the supply of goods, especially from China, which is currently again in
a Corona lockdown. This year we are experiencing another striking turning point with the Ukraine war. While our thoughts and actions over the last 70 years have been shaped by the assump- tion that international trade strength- ens peaceful coexistence in the world, this spring we had to painfully realise that this maxim unfortunately has only limited validity. This painful realisation now has a direct and significant impact on the further strategic orientation of our industry. While quality, delivery time and costs were previously the only decisive factors, geo-political and logisti- cal risk considerations are now increas- ingly taking centre stage. All sources of supply are being subjected to critical scrutiny, and one can only hope and warn that international trade will not suffer too much as a consequence.
Currently, global supply bottlenecks, high energy costs and massively rising inflation pose unexpected challenges that are difficult to calculate. As it
is usual the case in such disruptive times, we are seeing crisis winners who are maximising their profits - but also crisis losers who have to fear for their existence. Due to the dynamics of these developments, it is usually very challenging for the crisis losers to react appropriately.
If we look at the pipe market in Europe, about 20% of its imports have so far
been supplied by Russia and Ukraine, we are currently experiencing signifi- cant increases in demand to compen- sate for these losses. Russia, under the influence of the supply embargo, will certainly be out of action for a longer period of time. Ukraine, whose logistics have already been massively destroyed by the war, will certainly not be able to deliver again in the short term. Massive bottlenecks in the supply of energy, primary materials and qualified person- nel must continue to be feared. These supply shortfalls will lead to further price increases and will have to be compensated by other pipe producers. Pipe prices have risen by more than 50% in this context. The increasing momen- tum in the realignment of the energy market continues to lead to increases in demand for pipes. Markets such as the USA, India, Europe and the Arab states are characterised by high demand for steel products as well as pipes. As a result, prices for steel pipes in the USA and other regions have risen sharply. Some steel and pipe producers as well as mechanical engineering companies, which equip the steel and pipe industry with high-performance plants, were able to massively increase their economic successes.
Despite high capacity utilisation of
the plants worldwide due to the high demand, some pipe manufacturers were unfortunately not able to take advan- tage of these so-called windfall profits and therefore had to report losses in the first quarter of 2022. Further challenge is imposed, if political measures to prevent climate change, such as the additional CO2 costs agreed by the European Union, are not introduced in a balanced way. These effects may also lead to pos- sible consequences, being the migration
ITAtube Journal June 2022