In the next three years, price growth of coiled tubing services is projected to accelerate, primarily due to a continued rebound in industrial production.
Los Angeles, CA (PRWEB) February 01, 2015
Coiled tubing services have a buyer power score of 2.4 out of 5, which is indicative of relatively weak buyer power. Buyer power is hampered by factors such as high level of price volatility, high market share concentration, significant specialization and switching costs. “At the same time, relatively slow growth in the price of these services during the past three years and the moderate availability of substitutes have facilitated buyer power to an extent,” says IBISWorld procurement analyst Agiimaa Kruchkin.
The key factor providing some relief to buyers is slow price growth. In the three years to 2014, the average price of coiled tubing services has slowly trended upward on the back of conditions in the downstream oil drilling and gas extraction markets. Namely, as the price of oil has subsided, demand for related coiled tubing services has also weakened. “This trend has spurred suppliers to curb price growth despite rising natural gas prices and demand for natural gas-related coiled tubing services,” adds Kruchkin. Buyers also benefit from a moderate level of substitute services, which provides leverage during the negotiation process. This is especially true when it comes to price because many substitute services can provide the same or similar functions for a much lower cost. For example, workover rigs can be used to replace or repair broken components inside an oil well or natural gas site for about one-third of the cost; however, coiled tubing can perform the work faster and without having to halt production on the well.
Although price growth has been relatively slow during the past three years, price volatility has been significant due to large annual swings in the prices of oil and gas. Furthermore, this market's high market share concentration, coupled with a high level of product specialization, means that buyers have a limited number of suppliers to choose from. High market share concentration also limits price competition among suppliers, further harming buyer power. In light of these factors, buyers are encouraged to lock in current rates before rebound in the price of oil spurs stronger demand and even higher prices for coiled tubing services. For more information, visit IBISWorld’s Coiled Tubing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of coiled tubing services, which are used in gas and oil wells to push chemicals into the well. Coiled tubing is also used for cable installation, chemical cutting, well cleanout, coring, fishing, fracturing, logging, milling, pipeline laying and intervention, well kill and sand control. Coiled tubing equipment includes truck crane units, lifting equipment, operator houses, tubing reels, wellhead support structures and tool string. This report excludes waste treatment services, environmental cleanup services, seismic services and plumbing services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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