Current offers of welded pipes, 2"-10" grade B as per ASTM A53/API 5L, to the domestic market are at an average of RMB 3,760-4,270/mt ($550-625/mt) ex-works. These local market prices exclude 17 percent VAT. However, market insiders have informed SteelOrbis that transactions are being concluded at around RMB 3,350-3,550/mt ($490-520/mt) ex-works, excluding VAT.
On the other hand, current export prices of Chinese welded pipes, 2"-10" grade B according to ASTM A53/API 5L, are varying at around $650-700/mt FOB, compared to $620-680/mt FOB one month ago.
Chinese market players expect that welded pipe prices will not fall back down in the short term but will continue their uptrend into the early part of July as most traders of HRC are bullish on the prospects for the future market. However, taking into account negative factors such as overcapacity, the financial crisis, weak demand and the approach of the dead season, prices of welded pipes will probably come down again eventually.
In addition, on June 19th the Chinese government announced an increase from five percent to nine percent in the tax rebate for welded pipes as per ASTM only (not per API) and also for other welded pipes not used in the oil and gas industry. The tax rebate for welded pipes as per API remains stable at 13 percent. In this way, the Chinese government is trying to strengthen the competitiveness of domestic pipe mills in the international market and therefore boost exports of welded pipes for general use. At the same time, construction grade steel products account for over 50 percent of domestic steel consumption, most of which are wire rods and steel tubes. Thus, the stimulation of exports may result in tight supplies of these products in the domestic market.