Page 10 - ITAtube Journal 32022

Market information
Figure 3: U.S. Domestic Hot-Rolled Coil Steel Futures Chart (average), Source: TradingView.com
Figure 4: Average Billet and Plate Prices, Source: SteelOrbis
future Europe will have to rely on much more expensive LNG gas, which means
a significant cost disadvantage of about 20% for energy-intensive industries such as the steel and pipe industries. It remains a major political challenge to secure that this cost disadvantage will be overcome to ensure European energy intensive indus- try to be again cost wise at eye level with the industry in other regions. To explore more of the own regional European gas resources may be a valid option hereto.
Electrical energy, the other major source
of energy for the steel and tube industry, has also seen massive price increases, peaking in Europe in August 2022 (€500) and increasing tenfold compared to January 2020 (€50)!
Since 22 August, the price of electrical energy has dropped to €150, but still remains three times higher than in January 2020 (about €50).
Compared to Europe, electrical energy prices in the US are far lower, only about 30% of European prices. This price dif- ference is another disadvantage for the energy-intensive European steel and pipe industry.
Pipe manufacturers buy hot-rolled coils, round billets or plates as input material for their production lines.
More than 70 % of the total world pipe production, i.e. about 110 million tonnes/ year, are welded pipes. Welded tube producers are highly dependent on hot rolled coil prices and to a lesser extent on plate prices. Average prices for hot-rolled coils started to spike in September 2020 (around USD 450) and peaked at USD 2,000 in September 2021. Since then, prices
have fallen to around 620 USD throughout 2022. However, a further maximum price increase of 80 USD/tonne is expected again for 2023.
Steel plate prices rose to an average price of around USD 1,800/tonne in the first quarter of 2022 and are now trading at an average of around USD 1,000/tonne in November 2022 (Figure 4).
ITAtube Journal December 2022
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Figure 5: Average Steel Tube and Pipe Prices , Source: US Bureau of Labor Statistics
The price of gas peaked at around USD
9.8 at the end of August 2022, i.e. about 250% higher than at the beginning of 2022. Since November 2022 (USD 6), the price of natural gas has risen again to around USD 7.5. Gas can only be transported over long distances by ships as LNG (liquefied natural gas), which requires expensive treatment compared to natural gas transported by pipeline. For the liquefaction around 10-25 % of the calorific value of the natural gas
is consumed. Therefore, regions like North America benefit from much lower gas costs as they have their own gas resources that can be used directly as natural gas. Europe has benefited for many years from cheap Russian pipeline gas, but now and in the