EXHIBITIONS
German Steel Tube Market 2016: German steel tube industry faces new challenges
W
hile, globally, steel tube production went down three per
cent to 164 million tonnes in 2016, this figure rose to 13 million tonnes in the EU and to 2.6 million tonnes in Germany – four per cent in each case. This positive European-wide result was caused by production increases in welded steel tubes with outer diameters of up to 16 inches and also large- diameter pipelines, whereas the production of seamless steel tubes had largely declined, due to restrained investments in the energy industry. Yet this generally positive result for the German steel tube industry must be seen in perspective, considering that Germany once produced nearly 4 million tonnes of steel tubes before the 2008/2009 financial crisis. The 2009 slump – with figures far below 3 million tonnes – was followed by a period of recovery from 2010 to 2012, when considerably more steel tubes were produced again. A further slump occurred in 2013, whereupon German production levelled out at around 2.5 million tonnes (see illustration: German Steel Tube Market 2007-2016). The strong fluctuations in production figures were due to general economic developments and, in particular, domination of the oil and gas sectors on the customer’s side.
Price developments in oil and
gas have been indicative over the last few years. When an oversupply on world markets led to a collapse in crude oil prices in 2014/2015, the energy industry largely suspended its investment activities. Stock market prices also continued to go down for gas.
30 IMT September 2017
This development particularly hit the supplier industry, where some sales figures dropped to less than half their values. North America’s fracking industry, which had been booming until then, was impacted particularly strongly by this development.
German production for export
It also affected German tube manufacturers who, traditionally, have always recorded extremely high exports. In Germany for example, nearly 99 per cent of the country’s production volume (i.e. no less than 2.37 million out of 2.4 million tonnes) was exported to other countries (source: 2015 Annual Report of the German Steel Tube Association). The trade surplus in this sector, however, was mitigated by over 2 million tonnes of imported steel tubes. To put it in simple terms, Germany’s demand for steel tubes is largely covered by imports, while domestic manufacturers produce almost entirely for export. The biggest German tube
manufacturers include Salzgitter, Benteler, Vallourec and Maxhütte. Salzgitter AG’s Mannesmann Division, which handles the group’s steel tube activities, shipped 543,000 tonnes in 2016 (compared with 526,000 tonnes a year earlier). Despite improved results at Salzgitter Mannesmann Grossrohr GmbH and an increase in the positive earnings of the Europipe Group, which are included in group’s consolidated accounts on a pro-rata basis, external sales in the tube segment as a whole experienced a slump, due to structural reasons and reduced earnings (source: Annual Report 2016). The Mannesmann Division
of Salzgitter AG largely focuses on international projects in the infrastructure and energy supply sectors, covering a broad spectrum of diameters for line pipes. Its portfolio is complemented by a company that describes itself as Europe’s dominating supplier of precision steel tubes for automotive engineering and another company that is a leading global manufacturer of seamless stainless steel and nickel-based tubes. As the group sees it, last year marked “a series of significant phases, if not turning points.” The Executive Board of Salzgitter AG believes that this included the EU Commission’s implementation of “effective trade protection instruments” against the “flood of dumped imports.” These measures were urgently required as the medium to long-term survival of Europe’s steel industry was meanwhile at stake with 330,000 jobs. The introduction of anti-dumping measures from February 2016 onwards was apparently a major factor in bringing about a provisional end to the extreme price erosion that had prevailed in Europe for several years.
Nevertheless, the company
www.internationalmetaltube.com
continues to see major challenges for the future, especially in the tube sector. It believes that large parts of the line pipe market and of the heavy plate sector are still in a precarious state. It is apparently impossible to predict the extent to which political upheaval in Europe and America might impact the basically favourable economic outlook. Consequently, it would therefore be “sheer negligence to solely rely on improved framework conditions in these uncertain times”. The number of orders received
by the Mannesmann Division in 2016 remained below the previous year. On the one hand, this was due to lower volumes of orders for stainless steel tubes received from European stockholding distributors and very low number of oil and gas projects. On the other hand, as expected, it was impossible to reach the extraordinarily high value of the previous year, even in large-diameter pipelines. A further negative factor impacting the level of orders was the development of the stainless steel tube segment. Outside the group of consolidated companies there was a substantial increase in the number of orders received by the Europipe CAT Group, mainly thanks to three projects: Nord Stream 2, TAP On-/ Offshore and Zohr, so that the number of orders was higher than in 2015. In all, following a slight surplus in the previous year, the Mannesmann Division made a pre- tax loss. The result did, however, include spendings on structural activities particularly at Salzgitter Mannesmann Line Pipe GmbH (MLP) which is seeking to counter the weak international oil and gas business and intensive price
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