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Market information
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 14 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 taken into account if these cannot be significantly 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 of Saudi Arabia and Russia. The USA on the other hand tried
to balance the possible supply shortages by additional own supplies and cancelling Venezuela’s oil embargo. These measures kept the Oil price mostly under 80 USD/ Bbl. (Figure 15). Therefore, under normal conditions, the World Bank projects the oil price to stay at maximum of 90 USD/Bbl. in 2023. In 2024 the projection is even lower at about 80 USD/Bbl., as global economic slows and if e.g. Venezuela will restart their idled equipment that remains in place across the country´s oil fields. This projec- tion 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.
Oil prices could soar to a record high of more than $150 a barrel if the war between
ITAtube Journal December 2023
Figure 14: Growth rate of the producer price index in selected countries January 2020 to September 2013
Source: Trading Economics/Statista.com
Figure 15: Oil price WTI development 1 year up to 27th of November 2023 (US$/Bbl)
Source: US Energy Information Administration
Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East as wit- nessed 50 years ago, the World Bank has warned. In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.
A scenario comparable to the Arab oil boycott against the West in 1973 would lead to supply bottlenecks that would cause the price to rise from around 90 dollars to between 140 and 157 USD/Bbl. The previ-
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