Executive Summary
The Electric Resistance Welded (ERW) tube industry is a foundational pillar
for global infrastructure, serving oil and gas, water, and energy sectors.
Yet, the industry is under significant strain.
Geopolitical instability, volatile material costs, and an aging technological
framework challenge its resilience.
At the same time, evolving market demands and sustainability
imperatives create a pressing need for transformation.
This article explores how industry players can navigate these disruptions,
align with emerging opportunities, and build competitive advantages.
By adopting advanced manufacturing technologies, leveraging market
diversification, and embracing sustainability, manufacturers can position
themselves for long-term success in a rapidly shifting landscape.
A Market in Transition and the Economic Pressures: A Double-Edged Sword
The Pricing Challenge
Overcapacity is a reality since years, especially in highly developed
regions.
For this reason, in order to secure a minimum break-even volume, ERW
mills are fighting a price battle, using price as the main ‘tool’ to open the
market.
Margins are so guaranteed by the volume itself and cost reduction.
Market disruptions
Since COVID, and above all, since post-COVID period, some market
unwritten rules have been broken.
Sea transportations and in general logistics are not same as they used to
be.
Logistics costs are less constant and less predictable. The connection level
of the world is somehow lower, countries are somehow more distant than
they used to.
Technological Imperatives
An Industry in Stagnation
For decades, the ERW tube industry has relied on tried-and-true
manufacturing techniques.
While effective, these methods have reached their limits in addressing
today’s demands for precision, efficiency, and sustainability.
ERW mill makers are under strong pressure for price.
Good profitability comes from services and spare parts sale, in order to
improve profit which is difficult to achieve with first supply, as competition
is becoming global and intensive.
On the other side, technological development from mill makers has been
relatively slow during last 20 years. Tailor made solutions are also risky
and expensive, so development is also kept at necessary levels, but not
more unless special situations.
There was a time when mill makers were bringing news to market
relentless: that is no more, or not at same extent.
Also, mill makers face issues in technical leaders growth, even at a higher
level than tube manufacturers. Retention of talents is difficult to tube
manufacturers, but mill makers need people who are also available for
working out of home several months per year, in order to develop
experience.
That makes talent retention even more difficult.
Tube producers need to establish their leadership in the projects again.
Leveraging Automation
Automation presents another path forward. By integrating digital control
systems, manufacturers can improve process efficiency, reduce labor
costs, and enhance product consistency. These advancements are
particularly valuable for mid-sized producers, who must maximize
resource efficiency to compete with larger players.
The Sustainability Mandate
Green Steel: An Opportunity for Leadership
As industries pivot toward net-zero goals, the ERW sector faces increasing
scrutiny over its carbon footprint. Steel production, which accounts for 7–
9% of global CO2 emissions, is a key area for reform.
“Green steel” produced using renewable energy and hydrogen, offers a
viable path to decarbonization.
Leading markets, particularly in Europe, have already begun demanding
sustainable materials.
Compliance with standards like ISO 9001 and ISO 14001 is becoming
essential for market access. Early adopters of green steel technologies can
position themselves as preferred suppliers in an increasingly
environmentally conscious marketplace.
Aligning with Policy
Governments are also playing a role in driving sustainability. Policies
promoting renewable energy infrastructure and electric mobility are
expected to increase demand for lightweight, high-strength tubes.
Manufacturers who align their operations with these policy priorities stand
to benefit from both market and regulatory tailwinds.
Strategic Priorities for Manufacturers
1. Expand Market Focus:
◦ Target high-margin sectors
◦ Increase flexibility of your plant
2. Establish technological leadership
◦ Develop or enhance new products
◦ Develop in-house technology
◦ Leverage digital transformation
3. Strengthen Supply Chain Resilience:
◦ Develop local and regional supply networks
◦ Partner with suppliers to ensure consistent access to high-
quality raw materials.
4. Optimize Cost Structures:
◦ Invest in energy-efficient processes to reduce operational
expenses.
◦ Leverage digital tools to optimize supply chain management
and minimize waste.