Los Angeles, CA (PRWEB) October 16, 2013
Extreme volatility in the price of steel has damaged the Metal Pipe and Tube Manufacturing industry over the five years to 2013. As steel prices skyrocketed, plummeted and then surged again, so too have the fortunes of industry operators. Over the five years to 2013, industry revenue has fallen at an annualized rate of 0.9%, to reach $12.2 billion. According to IBISWorld Industry Analyst Stephen Hoopes, “Over this period, key buyers in downstream oil and gas drilling, manufacturing and construction industries, cut demand for industry products, causing revenue in 2009 alone to fall an astounding 46.2%.” This staggering performance was due to the compounding effects of falling steel prices, weak demand and mounting external competition. Fortunately, in 2010 and 2011, demand rose and steel prices surged, returning revenue to growth. However, in 2013 specifically, revenue is expected to remain flat as competition from imports and substitutes intensify.
Operators are stand-alone producers of metal pipes and tubes, and therefore obtain the steel used in production from outside sources. As the industry's primary input, steel prices have a significant impact on the performance of industry operators. In the five years to 2013, steel prices are estimated to fall. However, this modest decline hides extreme fluctuations, including a price drop in 2009 and double-digit growth in 2010 and 2011. In general, steel prices have been on an upward trend for more than a decade, fueled by rapidly growing demand from emerging economies, such as China and India. “Operators have reacted to the rising cost of inputs by passing the additional expenses onto customers; however, weak demand and price volatility during the recession made this a difficult practice,” says Hoopes. As a result, industry manufacturers were forced to absorb a significant portion of higher input costs, which hurt profitability.
Demand for the industry's products is expected to increase through 2018, as rising oil and gas prices provide an incentive for downstream buyers to boost production, increasing their need for industry products. Additionally, sustained growth in automotive component manufacturing will increase demand for metal pipes and tubes. In this climate of rising demand, industry revenue is forecast to expand from 2013 to 2018. However, increasing competition from substitutes and imports will leave profit margins relatively constant over the five-year period.
For more information, visit IBISWorld’s Metal Pipe and Tube Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators, who are stand-alone producers in the Metal Pipe and Tube Manufacturing industry, manufacture welded, riveted and seamless pipes or tubes from purchased iron or steel. Consequently, steel is purchased as primary input material to the metal pipe and tube manufacturing process.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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