Price trends

Also in 2016, prices were influenced by lower demand in an industry plagued by overcapacity, by the global protectionist measures, and by low raw material prices. 

Following the decrease in demand that started in 2015, the demand for seamless carbon steel pipes reached a low point in 2016. Although the market for seamless pipes is traditionally international, we observe that these influences are diminishing due to various protectionist measures introduced by e.g. the European Union and America. The result is that Asian pipe manufacturers generally focus on internal markets, the Middle East and Africa. While demand in Europe experienced a slight decrease, the decrease in America, Asia and the Middle East was significantly higher due to a lack of demand for pipes from the oil and gas industry (exploration). As a result, the entire industry was hit hard.

Many pipe manufacturers were forced to take measures by closing various mills, closing down production lines, or staff reductions. An additional factor was the low price of raw materials, such as iron ore and scrap metal. However, in December manufacturers of seamless pipes saw their order books grow significantly, partly due to improved demand resulting from the slowly improving global economic situation.

The market for welded materials was initially weak. However, price levels significantly increased over the course of 2016. Aside from the slight revival in the demand for pipes and hollow sections within the construction segment, this was primarily caused by further protectionist measures by the EU on the import of strip steel (the primary material for welded pipes) from China. These measures were announced to protect a large part of the ailing European steel industry. The continuing strong demand for strip steel by the European automotive industry, combined with a virtually dried up import flow and the increasing prices of raw materials, resulted in price increases for hot rolled coil (HRC) of more than 70% during 2016. This effect was not only limited to Europe. These price increases for primary materials influenced the ultimate price of welded pipes.

The price trends for stainless steel welded pipes was similar to that of welded materials. During a large part of the year the low market demand and overcapacity at welded pipe manufacturers played an important role in setting prices. Real price increases only took place later in the year, in part due to the influence of increasing nickel prices. The EU’s protectionist measures against the import of seamless materials from China were retained in 2016.