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 December 2023
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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 major challenges for the indus- try. The war between Hamas and Israel recently started October this year is another new conflict threatening the world, since it has the potential to create a wildfire in Middle East with dramatic consequences for the world economy. Increasing tension between the US and China officials create further clouds for free international trade. Political interventions and regulations are increasingly influencing industrial strategies and actions.
The transition to environmentally friendly and carbon reduced produc- tion 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. Regions such as the USA, India, Turkey and China are benefiting from lower energy and industrial producer cost. Inflation is still relatively high and alarms our industry as well. The high level of public debt caused by the expen- sive measures taken to overcome the various crisis in recent years give rise
to fears that the central banks’ effec- tiveness in combating inflation will be limited and that little improvement can therefore be expected in the short term. All these unexpected challenges are dif- ficult to manage.
As always in such disruptive times, we see crisis winners who maximise their
profits - but also crisis losers who must fear for their existence. Due to the dynamics of these developments, it is usually very difficult for the crisis losers to react appropriately. As a result, some 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 consid- erations as well as current and future energy costs are increasingly taking centre stage. All sources of supply are being critically scrutinised, and one
can only hope and warn that interna- tional 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-intensive steel and tube indus- try.
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 offer opportunities that should be seized.
The new conflict in middle east, the war between Hamas and Israel, still does not have significant impact on energy prices for oil and gas, anyhow analysts are concerned about possible upcoming consequences. The present price of natural gas is less than
3 USD/MMBtu, is about 1 USD higher than 2nd quarter 2023, but within the lower 10 years price corridor (Figure 1).
ITAtube Journal December 2023