The total size of domestic steel tube production more than doubled in 2018 compared with the previous year, due to the signing of major projects abroad by the leading company in the industry, ICAP said in a survey released on Monday.
The survey showed that domestic consumption of steel tubes fell steeply in the last decade. However, the market has begun recovering in recent years.
The size of the domestic steel tube market (in tonnes) showed a cumulative decrease of 60% in the period 2008-2018, due to the sharp decline in the construction industry. It is noteworthy that some businesses have changed their activity to face increasing competition and a negative economic climate. However, in the last few years the market has experienced small annual increases (1.3% in 2018/2017). The latest developments and prospects for this sector are presented in the sectoral survey conducted by ICAP’s Economic Studies Division.
Construction and construction activity as well as large public works are among the main factors affecting demand for steel tubes.
According to ICFAP Consultant for Economic Studies, Maria Flotziou, domestic steel pipe production is characterized by a high degree of concentration and covers only seamed pipes, while the demand for seamless steel tubes is entirely covered by imports. The largest volume of production is covered by a large-scale industry.
Industry companies do not exclusively deal with steel pipes. Some of them are active at the same time in the import and trade of metals, fittings, industrial supplies and more generally in the “Metal Products – Construction” sector. Conditions of intense competition in the industry have worsened considerably in recent years due to a drastic fall in domestic demand due to the country’s economic downturn that has hit investment, leading most industry companies to turn to international markets in order to retain their position in the market. In addition, the industry’s top industry turned abroad, where despite intense competition, it has been particularly positive.
Imports of steel tubes generally followed a declining trend. The import penetration rate fluctuated between 2004 and 2018 and stood at around 31% in 2018. As already mentioned, total exports have seen a “steady” increase in recent years.
The survey carried out a financial analysis of the industry based on balance sheets. From the analysis of the aggregate balance sheet of nine enterprises for which data are available for the 2016-2017 period, the following results are shown: total assets fell by 4.3% in 2017 due mainly to the decrease in inventories and net assets. By contrast, equity increased by 4.1% in 2017. Medium-term liabilities and provisions declined sharply (41.2%) in 2017/2016, while short-term liabilities increased by 8% over the same period. Total sales of 9 companies recorded an annual increase of 45.2% in 2017. This significant increase is due to the leading company in the sector, which has undertaken important projects abroad. However, due to higher sales costs (62.6%), gross profits fell by 35.3%. This led to a negative operating result in 2017, and the net result was loss-making in 2017 from profitable last year.