Electric Resistance Welded (ERW) Pipes and Tubes - Global Market Trajectory & Analytics

Collateral Damage of COVID-19 Spreads to ERW Pipes & Tubes, Eliciting a -10.6% Slump in Demand

The global market for Electric Resistance Welded (ERW) Pipes and Tubes is expected to slump by -10.6% in the year 2020 highlighting a 7.3 million ton erosion in consumption. Thereafter the market is expected to recover and reach 90.4 million tons by the year 2027 trailing a post-COVID-19 CAGR of 5.6% over the analysis period 2020 to 2027. The human cost of the pandemic is continuing to grow and is expected to deal an unprecedented blow to people, businesses and economies worldwide. Seven months into the pandemic, infections worldwide are continuing to spiral. Continuing lockdowns, labor shortages, mobility challenges, supply chain disruptions, financial distress and plummeting investments have impacted a bulk of construction activity worldwide. Diversion of government funds from infrastructure development to pandemic firefighting has additionally impacted the construction industry, which is dependent to a large extent on infrastructure projects. In several countries, all non-essential construction projects have been put on hold with the exception of building emergency hospitals for COVID-19 care. Residential construction is taking a beating with millions of people worldwide pushed into unemployment as businesses either go bankrupt or layoff workforce to stay afloat. Unemployment rates are climbing to worrisome levels in both developed and developing economies alike. The loss in consumer confidence and erosion of household wealth and discretionary spending will impact virtually every industry and business worldwide. With unemployment rates rising amid the virus induced economic crisis, consumers are cutting spending budgets. Social outlook against this background remains grim with households expected witness erosion in wealth. Personal financial outlook, community, economy, job security confidence, purchasing and investment confidence are all tumbling as the human and economic cost of the global pandemic rises. For the construction industry, this brings bad news as new housing starts go into deep freeze. The long shadow of the coronavirus is thwarting home-buying plans of consumers. With countries seeing a second wave of infections, the Covid-19 resurgence is likely to undermine the much awaited chances of a V-shaped recovery. Challenges of maintaining social distancing at construction sites is resulting in difficulties in obtaining project clearances from regulatory authorities. Ensuring raw material availability still remains a challenge for most construction contractors.

The shattered oil & gas industry is facing its worst ever crisis, an overstocked supply market and a steep decline in demand. Choking economic activity over the last few months is sending shockwaves of disruption through the industry. From prices dipping to subzero to oil producers in the first time in history having to pay to dispose excess stocks, the industry has seen the worst. In this crisis of unimagined magnitude, CAPEX spending is worst hit. As business confidence plummets rapidly, major oil companies have already slashed planned CAPEX spending by almost US$89 billion in 1st quarter 2020. Travel bans, manufacturing shutdown of all non-essential plants, closure on offices have wielded the most severe demand shock. A mistimed price war between Russia and Saudi Arabia following Russia`s decision to pull out of a joint production cut agreement additionally aggravated the demand supply imbalance. China in early February during the heat of the pandemic banned entry of oil tankers while tightening the lockdown measures. OPEC talks to cut back on production failed as Russia refused to cooperate. Saudi Arabia during this period offered US$6 to US$9 discount per barrel for European, Asian, and U.S customers. Currently for most oil giants worldwide higher prices are needed to breakeven. Breakeven prices for Saudi Arabia, UAE, Iraq, Azerbaijan, Kuwait, Kazakhstan, and Russia include US$85, US$65, US$64, US$51, US$49, US$42, and US$40 respectively. As a culmination of these factors, the world witnessed negative oil prices become a shocking reality. As rising stockpiles overwhelmed storage facilities, the amount of oil stored on massive tankers on sea skyrocketed to over 160 million barrels in April 2020 as compared to the less than 100 million in April 2009 during the Great Recession. The entire O&G value chain is feeling the pain as upstream, midstream and downstream operations collapse under a domino effect. Under this scenario, demand for ERW Pipes & Tubes is expected to decline.

Post COVID-19, Here`s How Market Growth Drivers Will Regroup

In the post COVID-19 period, refocus on infrastructure projects such as water and sewage systems and oil and gas pipeline networks will help bring growth back. Recovery in oil prices from the prolonged slump and a parallel improvement in spending on exploration and production (E&P) activities will brighten the outlook for oil pipeline infrastructure projects. Few of the benefits driving the preference for pipelines as a transport and distribution mechanism to get oil-to-market include cost effectiveness as it is decupled from transport fuel prices; safer and easier to transport; more reliable than rail or road; ensures stable supply to remote areas with inadequate road connectivity; eliminates the risk of pilferage, spills and wastage; reduced risk of environmental disasters; consumes less energy and has a relatively smaller carbon footprint compared to rail, road or ship transport; proposed pipeline projects are cheaper than the expansion of road transportation infrastructure. Other major factors which will driving growth include aging water, sewage and gas pipeline infrastructure in developed countries and the ensuing need for replacements and upgrades; shale gas exploration growth in North America and the ensuing demand for high strength casing pipes; rapid industrialization in developing countries and the ensuing need for pipeline constructions in new industrial facilities; pressure applications in boilers and oil stills and the ensuing demand for pressure tubings; growing opportunity for ERW Pipes in agriculture in line with the increased adoption of micro irrigation methods; growing concerns over water shortages and the ensuing focus on efficient water management and distribution. Hazardous operation of liquid and natural gas transmission pipelines will encourage governments worldwide to develop and implement comprehensive pipeline integrity management programs including mandatory continuous assessment of pipelines, which is expected to fuel replacements and upgrades. Asia-Pacific will remain a key market supported by the emphasis on smart city initiatives, growing population and increased demand for infrastructure that ensures optimum distribution of resources such as electricity, energy, and water. Densely populated urban cities are also driving demand for underground carriage systems for transporting sewage from buildings and homes. In the United States growth will come from government policy focus on remedying the country`s crumbling infrastructure.

Select Competitors (Total 118 Featured):

• Al Jazeera Steel Products Company SAOG
• APL Apollo Tubes Limited (APL)
• Arabian Pipes Company
• ArcelorMittal SA
• ChelPipe
• Choo Bee Metal Industries Berhad
• EVRAZ North America
• JFE Steel Corporation
• Maharashtra Seamless Limited
• Nippon Steel & Sumitomo Metal Corporation
• PAO TMK
• PT Bakrie Pipe Industries
• Salzgitter Mannesmann Line Pipe GmbH
• Surya Roshni Ltd.
• Tata Steel Europe
• Techint Group SpA
• Ternium S.A.
• Tenaris S.A.
• TenarisSiderca (Siderca S.A.I.C.)
• United States Steel Corporation
• United Metallurgical Company /OMK
• Welspun Corp Ltd.
• Wheatland Tube Company