China's seamless pipe market indicated a weakening ahead of the Spring Festival holiday (February 14-21). Domestic prices for seamless pipes have decreased by RMB 100/mt ($10/mt) over the past two weeks. Export quotations of seamless line pipes have declined by $20-30/mt over the period under review, while prices for casing and tubing have remained unchanged. The main reason behind the price decreases has been the insufficient demand in both the domestic and overseas markets. Demand for seamless pipes has remained subdued and may not pick up even after the holiday concludes.
Chinese domestic prices of seamless pipes, 2"-6" grade B according to ASTM A106 or GB/8163, are currently varying at around RMB 4,700-5,000/mt ($690-730/mt) ex-works. These prices for the local market include 17 percent VAT and are on actual weight basis. Domestic quotations of tubing pipes of 2"-4" size, grade J55 as per API 5CT, plain-ended, are at about RMB 5,000-5,300/mt ($730-775/mt) ex-works. Chinese domestic prices for casing, 6"-8" grade J55 according to API 5CT, are varying at around RMB 5,000-5,200/mt ($730-760/mt) ex-works.
Current export offers of seamless pipes from Chinese manufacturers for 2"-6" grade B material according to ASTM A106/API 5L are on average at $650-680/mt FOB. Export quotations for 2"-4" tubing J55 as per API 5CT, plain ends, are in the range of $690-720/mt FOB, while quotations for 6"-8" casing are at $680-720/mt FOB.
Exporters of seamless pipes from China continue to suffer from antidumping duties in the EU and US. China's export volume for seamless pipes in December 2009 reached 287,991 mt, down 352,650 mt or 55 percent year on year. Total exports in January-December 2009 reached 3.1732 million mt, down 2.9181 million mt or 48 percent. Market insiders think that the central government should appropriately raise the export threshold for Chinese companies.
At the same time, China's output of seamless steel pipes has seen rapid growth. In December 2009 the output figure was 2.22 million mt, 9.2 percent higher than in December 2008 and 13 percent higher than in November 2009. Seamless pipe production in China in January-December 2009 totaled 21.8 million mt, up 3 percent year on year. Seamless pipe producers in China are obliged to arrange production in line with real demand, refraining from blind optimism and keeping a clear mind amid the difficult market situation.
Market players expect that the outlook for the Chinese seamless pipe industry will be better this year than in 2009, as the impact of the government's stimulus measures continues. Domestic seamless pipe demand is expected to be supported by a strong increase in new investment plans, while improving external demand in line with the world economic recovery will encourage steel pipe exports. However, overcapacity, continuing weakness of external demand and rising production costs will place pressure on the development of the market.