Oil Exploration and Production Industry
- When prices rise: An increase in the price of oil pipelines will raise the equipment procurement and maintenance costs of oil exploration enterprises. However, if the oil price also rises simultaneously or remains high, the overall revenue of the enterprises may still increase. They will have more funds to expand production scale, develop new oil fields, and upgrade exploration technologies.
- When prices fall: The decrease in the price of oil pipelines reduces the procurement costs for enterprises, which is conducive to controlling production costs. Nevertheless, if the oil price drops as well, the enterprise’s revenue will decline. They may reduce the demand for oil pipelines and even suspend some non – essential pipeline procurement and maintenance projects to cut expenses.
Steel Industry
- When prices rise: A rise in the price of oil pipelines will prompt steel enterprises to increase the production of steel required for manufacturing oil pipelines. This will drive up the prices of related steel products, boost the profits of steel enterprises, and encourage them to expand production scale and increase R & D investment to improve product quality and performance.
- When prices fall: The demand for oil pipelines in the market decreases, and the production of related steel products by steel enterprises may become excessive, leading to a decline in steel prices. This squeezes the profit margins of steel enterprises. They may adjust their product mix, reduce the production of steel for oil pipelines, and shift to other high – value – added products.
