Page 8 - ITAtube Journal 2 2024

Market information
Dr. Gunther Voswinckel, VOSCO GmbH
World Tube & Pipe Market: Factors influencing the current situation
Dr. Gunther Voswinckel – Update as per July 2024
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Welcome to ITA’s and VOSCO´s regular presentation of the main worldwide economic factors influencing the tube and pipe industry.
The Russian invasion of Ukraine and
its consequences, the war between Hamas and Israel, possible upcoming war between Israel and the pro-Iranian Hezbollah militia, the increasing ten- sions between the USA and China, the Houthi attacks in the Red Sea and the upcoming elections in France and Iran are threatening our industry or are at least being closely monitored. After the initial turbulence on the energy mar- ket, the impact of these threats has weakened considerably, as the parties involved have so far succeeded in lim- iting these conflicts locally and pre- venting them from spreading to other regions. However, political intervention and regulations are increasingly influ- encing the strategies and actions of the industry.
The necessary transition to environ- mentally friendly and carbon-reduced production has become a central task for the industry. The consequences of the associated increase in costs are un- evenly distributed worldwide. Despite generally lower energy prices, Europe is confronted with comparatively high energy prices and taxes for carbon-in- tensive industries. Regions such as the USA, India, Turkey and China are bene- fiting from lower energy costs. The high level of government debt caused by the expensive measures taken to overcome the various crises gives rise to fears that the central banks’ effectiveness in combating inflation will be limited.
Pipe manufacturers were able to record an increase in profits in 2023, but high energy prices and CO2 levies are weigh- ing on pipe manufacturers in Europe.
Due to the dynamic nature of current developments, it is usually very difficult for manufacturers to react appropri- ately. Some manufacturers are losing confidence in their ability to compete on the global market with these addi- tional costs and are even reducing their involvement in Europe as a result. Some countries/regions are therefore looking for suitable political countermeasures to compensate for their cost disadvan- tages.
Whereas quality, delivery time and costs used to be the only decisive factors, geopolitical and logistical risk considerations as well as current and future energy costs are now increas- ingly taking centre stage. All sources of supply are being critically scrutinized and one can only hope and warn that international trade will not suffer too much as a result. In particular, 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 Utilization and Storage (CCUS), new networks for hydrogen transport, electromobility and productivity im- provements at production sites as part of the transformation to more environ- mentally friendly plants offer opportu- nities that need to be exploited.
As already outlined in earlier reports, the availability of economical energy is a deci- sive factor for the industry. Geopolitical turbulences and political regulations have changed the regional balance with increas- ing challenges for the industry in regions with higher energy cost. This may change the industrial landscape of the energy intensive industry with significant future
ITAtube Journal July 2024