Date of publication: April 2016
The 4th edition of AMI’s Steel Pipe Coating market report analyses the current state and forecasts the future of this industry.
The world is experiencing an almost unprecedented period of economic instability. The North-American manufacturing revival has injected a certain dose of optimism, but the economic fortunes of Europe remain a very mixed bag, while the Japanese economy still stagnates. China – which for the past few years has acted as the world’s growth engine– is entering a difficult process of economic transformation, which should ultimately see domestic consumption replacing exports as the main source of economic growth. While one can see logic in this change of gear, the question is how smooth and successful this transition will be.
Oil & Gas-related industries are strongly affected not just by economic factors, but by politics, by diplomatic and military conflicts, as well as by the vagaries of crude oil prices. Few O & G industries are, however, as strongly influenced as pipeline construction. Building new pipelines often implies costly projects, with complex ramifications in terms of finance, economics, environment protection, etc. As mankind is attempting to access Oil & Gas reserves that are more and more difficult (and therefore expensive) to exploit, trends in crude prices have increasingly become an issue. Projects that are highly profitable at $70 per barrel may be losing money at $50 per barrel. Large cross-border projects exhibit additional layers of complexity, because politics as well as economic interests render decision processes opaque and their outcomes often impossible to accurately predict.
On the other hand, the fundamentals remain strong in this business: the world’s demand for energy continues to grow; despite faster growth in renewable sources, fossil fuels remain by far the major primary sources; changes in the map of Oil & Gas (in terms of both supply and demand) translate into a need to open new transportation routes; in fact, building redundancy in terms of Oil & Gas supply sources and transportation routes is an imperative for many countries, due to the fact that fossil fuels are increasingly becoming strategic resources of the utmost importance; in many cases, pipelines continue to be the cheapest, most reliable and safest means of O & G transport; most pipelines continue to be manufactured from carbon steel – which necessitates active and passive means of corrosion protection; furthermore, both the composition of Oil & Gas and the environments from which they are extracted present tougher and tougher challenges, necessitating more and better-performing coatings; last but not least, challenges related to climate change open new applications for pipelines in water transport and Carbon Capture and Storage.
All this appears to support the belief that demand will eventually resume strong growth. But when will that happen? What is the most likely trajectory to be followed? What is the most likely evolution in the various geographic and application segments and, hence, how can suppliers position themselves to exploit the upcoming opportunities?
The study attempts to provide well-researched and reasoned answers, based on the collective expectation of the industry in its many different segments, as revealed through a large number of interviews with coaters, pipe manufacturers, raw material suppliers, machinery manufacturers, contractors, pipeline operators and end-users.