Global conflicts and US tariffs jeopardize API steel demand
European Parliament respondents remain cautiously optimistic about the medium-term prospects for demand for API line pipes, despite growing global uncertainty related to the imposition of a 50% tariff on steel imports to the United States and increased tensions in the Middle East.
On June 19, Brent crude oil prices declined. The price jumped to a six-month high of $77.08 per barrel amid heightened geopolitical tensions in the Middle East. The ceasefire agreement between Iran and Israel, which the United States announced on June 23, negated most of these achievements. However, violations of the ceasefire agreement or any disruptions in container shipments through the Strait of Hormuz continue to pose a threat to the stability of oil prices.
Investments in the oil and gas industry are at a good level, driven by the growing demand for energy resources, especially for projects requiring API line pipelines in the United States, Latin America, Africa and the Middle East. As the global transition to greener energy continues, several market participants have reported a slowdown in carbon capture and storage projects due to the high cost of financing and general economic and geopolitical uncertainty.
Project activity in the USA remains active. However, the doubling of import duties under Article 232 to 50% is causing concern among supply chain participants. Most domestic pipe manufacturers have full order portfolios, which forces some U.
S. buyers to continue purchasing pipes from abroad in order to meet project deadlines, especially for more technically demanding pipe brands.
Tariffs lead to the revision or cancellation of orders.
Buyers from the United States who, at the time of the tariff increase under Section 232, were on their way to supply pipes, coils, or rolled products that meet API requirements were forced to review prices. Some overseas suppliers have reported that orders have been postponed or cancelled. Many hope that July 9, the deadline for negotiations on "mutual" import tariffs for each specific country, will bring more clarity to the issue of future import costs. Rising domestic prices and long delivery times for API line pipes are expected to maintain a certain level of import activity, even with tariff increases of up to 50%.
Global demand for API rolls and sheets turned out to be lower than expected. European sheet metal plants, in particular, continue to face declining orders due to delays in project implementation. Consequently, many of them still have spare production facilities for the second half.