daily wire & Tube: Mr. Voswinckel, what are the main factors currently influencing the tube and pipe industry?
Gunther Voswinckel: We are observing significant impacts from Russia’s invasion of Ukraine in 2022 and the recent conflict between Hamas and Israel. In addition, tensions between the USA and China, along with political regulations, play a significant role in our sector.
How is the industry coping with inflation?
Inflation is indeed a global problem that affects more than just our industry. The high level of national debt following recent crises is giving rise to fears as to whether central banks can effectively control inflation. This situation creates an uncertain economic environment. Our industry, which is highly capital-intensive and globally oriented, is particularly sensitive to such economic fluctuations.
How is the industry responding to these geopolitical and economic challenges?
We are placing greater emphasis on geopolitical and logistical risk analyses and energy cost assessments. We are critically evaluating all sources of supply in order to minimise international trade influences, particularly with regard to energy prices. The regional differences in energy costs will alter the landscape of the energy-intensive steel and pipe industry.
Mr. Voswinckel, let’s talk about the industry’s green transformation. What challenges are pipe manufacturers facing?
Transitioning to more sustainable production methods is crucial yet financially challenging. Europe, in particular, with its strict regulations and high energy prices, bears the brunt of these costs. Levies imposed on carbonintensive industries push production costs up. This in turn has an impact on the competitiveness of European companies on the global stage.
How do different world regions handle varying energy prices, especially regarding the steel and pipe industry?
Europe, for example, is struggling with high energy prices and CO2 taxes, while regions such as India, Turkey and China are benefiting from lower costs and, in some cases, less stringent environmental regulations. European initiatives like the ETS and CBAM aim to level the playing field but also raise production costs, especially for exports.
And the USA?
The USA has introduced the Inflation Reduction Act (IRA), which, in contrast to the European approach, provides significant incentives for low-carbon investments. The IRA has triggered a surge in investment, while the European levy system has led to irritation among investors and an economic recession. Europe therefore faces a cost disadvantage as long as cheaper energy sources are not available.
How do energy prices affect the industry?
Most tube and pipe manufacturers were able to report improved economic figures in 2023, but high energy costs and European CO2 levies are weighing on European producers. Some manufacturers are losing confidence in their ability to compete on the global market with these additional costs and are even reducing their involvement in Europe as a result.
How do you rate the industry’s innovative strength?
Despite the challenges, there are plenty of opportunities for growth and innovation, especially in new markets such as carbon capture, utilisation and storage (CCUS). New networks for hydrogen pipelines will require larger quantities of alloyed pipes from 2025, as will electromobility and innovative pipe solutions for the construction of buildings. Many suppliers have already responded to this and expanded their product portfolio to include environmentally friendly and digital solutions. However, if political measures against climate change are not introduced in a balanced way, this may result in the migration of industries with high energy consumption to regions with lower costs.
Thank you, Mr. Voswinckel. We look forward to seeing how these developments will be presented at Tube 2024 in Düsseldorf.
I am confident in our industry’s resilience and adaptability. At Tube 2024 in Düsseldorf, we will discuss ways to ensure the long-term success of our pipe industry.
