Report says auto manufacturing, rising oil prices will spur demand for metal pipe, tube

October 28, 2013

IBISWorld, a Los Angeles-based source of industry and market research, has updated its report on the metal pipe and tube manufacturing industry in reaction to the market’s volatility in the past five years.

Volatility in the price of steel has damaged the metal pipe and tube manufacturing industry over the last five years. Metal tube and pipe producers manufacture welded, riveted, and seamless pipes amd tubes from purchased iron or steel. As steel prices skyrocketed, plummeted, and then surged again, so too have the fortunes of these manufacturers. From 2008 to 2013, industry revenue has fallen at an annualized rate of 0.9 percent 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 percent." This staggering decrease was due to the compounding effects of falling steel prices, weak demand, and mounting external competition.

However, demand for the industry's products, and industry revenue as a result, 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. Increasing competition from substitutes and imports are expected to leave profit margins relatively constant over the five-year period.



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