Chinese welded pipe prices still on the rise but uptrend may slow down

Wednesday, 28 April 2010 11:40:36 (GMT+3)   |  
       

Chinese welded pipe prices have continued to follow an upward trend, pushed up by rising material costs. Domestic prices of Chinese welded pipes have soared by RMB 200-300/mt ($30-45/mt) over the past month, while export quotations have increased by $20/mt.

Current offers of locally produced welded pipes, 2"-6" Q215-Q235 grade, are being given to the domestic market at an average of RMB 5,200-5,500/mt ($760-805/mt) ex-works, compared to RMB 5,000-5,200/mt ($730-760/mt) ex-works four weeks ago. These local market prices include 17 percent VAT.

According to the China Iron and Steel Association (CISA), in March China produced 2.874 million mt of welded pipes, more than February's 1.614 million mt and marking an increase of 15.6 percent year on year. Meanwhile, China's welded pipe production in the first three months of this year reached 6.915 million mt, up 20.1 percent on the corresponding period of last year.

Current export prices of Chinese welded pipes, 2"-8" grade B according to ASTM A53/API 5L, are varying at around $780-820/mt FOB, compared to $760-800/mt FOB one month ago. China's welded pipe export volume saw no improvement in March. According to the CISA, in March China exported 180,413 mt of welded pipes, indicating a decrease of 0.05 percent on the February level and down 26.5 percent year on year. China's total welded pipe exports in the first quarter reached 557,377 mt, down 26 percent year on year.

Taking into account that last week the Chinese HRC market saw a correction after its previous upward trend, most market players expect to see at least a stabilization of welded pipe prices. Prices of welded pipe are unlikely to repeat their strong surge in the near future given the existence of so many uncertainties including property industry regulation. However, market insiders think that a stricter national policy on housing loans may have just a short-term influence on the market. The outlook for welded pipe demand in China is still positive. It is expected that China's booming construction sector may generate more domestic demand for welded pipes which are mainly used in building/construction and pipe-laying sectors, which would thus lead to fewer exports.


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