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OCTG, oil and gas, as the largest target market of steel tube and pipe suppliers. This market is subdivided in pipes used for oil and gas rigs, such as drill pipes, joints, tubing and casings and further downstream the line pipes to transport oil and gas.
The number of new oil and gas rigs is heavily depending on the oil price. There is a strong correla- tion between the oil price and the number of oil and gas rigs in oper- ation (see also ITA tube Journal 2019/1). The OCTG tube and pipe consumption is depending on the number of rigs, but also the depth of drilling and the capacity of the rigs. After a long period of raising oil prices from early 2016 (30 US$/barrel) to October 2018 (85 US$/barrel), the oil price fell again down to 52 US$/barrel in only 2 months, to recover to about 72 US$/barrel until April 2019. Since April the oil price fell down to 58 US$/barrel (Figure 2). The volatility of this price is quite impressive and a consequence of nervous reactions to the political measures taken.
Under normal circumstances the world would face an oversupply of oil (see also ITA tube Journal 2019/2), but on the contrary hereto, due the political interven- tions by the US government, the sanctions imposed on Iran and Venezuela oil exports, created an arti cial mood of oil supply short- age creating the recent oil price rally throughout 2018. At the end of 2018 the price sharply fell again to about 52 US$/barrel. In 2019 the oil price strengthened again which may be caused by the upcoming thread of a political con ict with Iraq and the ongoing con ict with Iran (Figure 3). Now, since the political con icts seem
Figure 1: Markets for Steel Tube and Pipes
Source: ITATube Journal/Wirtschaftsvereinigung Stahlrohr
Figure 2: Oil Price Development 2014 until 2019 Source: Nasdaq
to calm down a bit, the oil price fell to 58 US$/barrel. It is to be observed what next political interventions are on Mr. Trumps agenda.
Since the oil price is heavily depending on political interven-
tions, it is increasingly demanding to give reliable forecasts for the consumption of steel tubes and pipes for this important market segment. Only agile management strategies can counter such chal- lenges.
Market information
ITAtube Journal No3/October 2019
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