Machine translation from English source
The Covid-19 pandemic could cause umbilical cord demand to fall by 32 percent this year, Rystad's energy impact analysis shows.
According to Rystad, expected demand could drop to just 713 kilometers of lines in 2020, down from 1,041 kilometers last year. Umbilical demand will not meet or exceed 2019 levels until 2023, Rystad says, despite some material savings. Until pandemic, the demand for umbilical cord should have decreased slightly this year compared to 2019. But from 2021 year, it was expected to recover and exceed last year's levels. Initially, between 2020 and 2022, Rystad saw a reduction in umbilical cord costs of approximately 5 percent.
However, if a global recession and a downturn in the oil and gas industry occur simultaneously, it could be almost 14 percent.
Oilfield services analyst at Rystad Energy Henrik Fiskadal said (sailor's robot):
“This will give umbilical cord producers short-term relief on their own costs as material prices fall, allowing them to maintain production volumes and regain some of their margins despite their own price declines.” However, this short-term relief may not last long as the global economy will recover from the Covid-19 pandemic.”
Limited opportunities for cost reduction (seafarer work)
The most common materials used to make umbilical cords are high quality stainless steel, carbon steel armor wire, hydraulic hoses, power cables, fiber optic cables and thermoplastic resins.
In addition to materials, engineering labor is the next highest cost associated with the production of umbilical cords. Therefore, the more complex and unique the design, the more labor-intensive and expensive the manufacturing and installation processes are. Material prices have remained relatively unchanged since 2014, while surf equipment service costs have dropped significantly. Rystad believes operators have exhausted much of their cost-cutting potential in the years following the 2014 downturn.
If we see a global recession, materials such as high-quality stainless steel could drop significantly in price. However, as the global economy recovers from Covid-19, material prices may rise even before the oil and gas industry is ready to accept higher umbilical cord prices. Additionally, demand could reach 798 kilometers in 2021, rising to 819 kilometers next year and 979 kilometers in 2023.
Source: worldmaritimenews
