The majority of export and domestic offers of seamless pipes from Chinese producers have risen over the past month. Upward pressure exerted by increasing round billet prices has been pushing up seamless pipe prices. In particular, domestic quotations have increased by RMB 200-400/mt ($30-60/mt) over the past month, with offers of Chinese seamless pipes for export increasing by $60-70/mt.
Chinese domestic prices of seamless pipes, 2"-6" grade B according to ASTM A106, are varying at around RMB 5,000-5,650/mt ($730-830/mt) ex-works, including 17 percent VAT. In particular, offers of pipes 4"-6" Sch 40/Sch 80 are being given at RMB 5,000-5,100/mt ex-works, offers of pipes 3" Sch 40/Sch 80 are at RMB 5,250/mt ex-works, while offers of pipes 2" Sch 40/Sch 80 are at RMB 5,600-5,650/mt ex-works.
Meanwhile, 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 $720-790/mt FOB. Export quotations for 2"-4" tubing J55 as per API 5CT, plain ends, are in the range of $820-860/mt FOB, while quotations for 6"-8" casing are at $800-840/mt FOB for August production material.
In June China produced 1.8923 million mt of seamless pipes, 2.2 percent higher than in June 2008. Total production for the first half of this year was 10.0945 million mt, up 3.8 percent over the same period last year. Exports of seamless pipes from China for the first six months of this year dropped by 33.43 percent compared with January-June 2008. The current situation is more difficult as Chinese pipe makers are afraid they may lose the European market because of the EU's new antidumping tax of 17.7-39.2 percent, which replaces the previous rate of 15-24.2 percent. It is important to note that the increased production and reduced exports of seamless pipes will provoke a situation of oversupply in the Chinese domestic market for some time. Though demand in the domestic market is not bad, it is not sufficient to absorb the volume of seamless pipes produced in China. This means that the Chinese producers will not be able to maintain their upward price trend in the long run. Furthermore, rising raw materials prices will limit the producers' profit margins.