EXHIBITIONS


competition with a restructuring programme involving capacity adjustments and further cost reductions.


Outlook for 2017: slightly better prospects The Salzgitter Group is expecting the companies in the Mannesmann Division to develop homogeneously again in the 2017 financial year. Whereas the group’s German large-diameter pipeline manufacturers are experiencing some good capacity utilisation, due to last year’s orders, the order situation has gone down somewhat on the North American market. Some recovery, albeit perhaps hesitant, can be expected in medium-sized line pipes and in precision and stainless steel tubes. in all, rising shipment volumes, supported by a higher selling price, should result in moderate sales growth in this segment. However, this is based on the assumption that there will be no recessionary development in Europe. The group is expecting to see continued economic success on its main markets which continue to be highly competitive. In all, Salzgitter believes that its prospects for the steel tube industry are slightly better compared with its very restrained estimate a year earlier. Following some initial upward stimuli caused by rises in raw material and steel prices, the steel tube business, too, should be receiving a boost. Positive effects are also expected from North America’s expansion- focused economic policy and greater orientation towards fossil energy. The seamless tube business, in particular, should continue its recovery, even though this segment still displays substantial overcapacities on a global scale. As before, the large-diameter pipeline market is dominated by project business and is highly competitive. The latter is particularly true for the line pipe business with diameters up to 16 inches. The precision tube industry should develop


robustly as the general economy is currently in good health. 2016 has received a similar assessment from the Benteler Group with its three divisions: Automotive, Steel/Tube and Distribution, controlled by Benteler International AG in Salzburg, Austria. Benteler sees 2016 as a year of intense competition, volatile markets and political challenges. Whereas its Automotive Division improved its sales and profits over the previous year, these figures went down for the Steel/Tube Division. This was caused by reduced demand in a market environment characterised by overcapacities and therefore put considerable pressure on price levels in the United States and Europe (source: Annual Report: 2016). An important factor in Germany


was a five-year agreement concluded with the trade unions in late 2016 with the aim of securing German production locations. It says: “The concept to secure the German locations forms the basis for a sustainable future for the Division and its ability to be successful in a rapidly changing market.” Benteler is cautiously optimistic about the company’s future economic development, believing, for example, that the Steel/Tube Division is facing a better situation in the market. At the same time, however, the earnings of the division have declined due to start-up expenses at its new hot rolling mill in Shreveport (US).


Thanks to general improvements in operational performance, the additional start-up expenses will lead to lower earnings of the group than in the previous year. Cautious optimism also characterises the group’s view of its economic environment which is showing some first positive signals in the steel tube market.


Steel tube market in a challenging environment Benteler, too, emphasises that the steel tube market was shaped by the development of oil prices in 2016. At the beginning of the year the benchmark rate WTI recorded its lowest point, but then recovered again during the year. The OCTG (Oil Country Tubular Goods) regions of North America and the Middle East, in particular, stabilised at the end of the year and are showing signs of recovery on the market. Many Asian countries are continuing to show positive, yet low-level growth, whereas China recorded a further drop in demand, due to a reduction in oil prices. The steel tube market in the EU is marked by overcapacities and price pressure. European manufacturers responded to a further decline in production of seamless steel tubes in the EU with cost reduction programmes and portfolio optimisation. Positive signals, according


to Benteler, are that tube inventories of oil and gas applications in the US market decreased further towards the


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end of 2016. The US rig count also rose to over 650 during the year, representing a rise of 48 per cent compared with the first quarter of 2016. Furthermore, OPEC’s consensus on oil production volumes had an invigorating effect on oil prices and on the resulting recovery of the steel tube market. Manufacturers and the association agree that prospects in the steel tube industry have improved since the previous year. After investments within the energy industry virtually came to a standstill in response to the slump in crude oil prices, the German Steel Tube Association now believes that such investments are beginning to bounce back to normality. The resulting pent-up demand should benefit the steel tube industry, in particular. Further positive effects on the steel tube business can be expected from cyclical rises in raw material and steel prices and from a steadily robust economic situation in the industrial countries – a situation which continues to be driven by relatively good energy prices, an expansive fiscal policy and a favourable euro/dollar rate. Although it is currently impossible to predict the development of the steel pipe industry in 2018, one thing is certain: steel tubes of all types and sizes and also plants and machinery for the production and processing of tubes will be a central topic at Tube 2018. The industry will be meeting for a new edition of its leading International Tube and Pipe Trade Fair at Düsseldorf fairgrounds from 16 to 20 April 2018. As before, it will again be held together with wire – the world’s biggest wire and cable trade fair.


Press contacts for Tube 2018: Petra Hartmann-Bresgen, M.A. Ulrike Osahon


Phone: +49 (0)211 4560-541 Fax: +49 (0)211 4560 87 541 Email: HartmannP@messe- duesseldorf.de


IMT September 2017 31


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