Chinese seamless pipe market still faces low demand

Over the past two weeks, Chinese market for seamless pipes has not seen significant changes. Business activity in the domestic market is still low, while overseas demand is depressed. Quotations of round billets have remained stable at the level of RMB 5,200-5,250/mt ($815-820/mt) ex-works with 17 percent VAT, and Chinese producers have maintained their domestic quotations for seamless pipes unchanged. However, domestic prices in dollar terms have increased by $10/mt on the back of the appreciation of the RMB. Export prices of Chinese seamless pipes have gone up by a maximum of $20/mt over the past two weeks due to currency fluctuations and the market's anticipation of a pickup in demand after the summer holidays and Ramadan. Although most market players expect to see a better market performance in September due to affordable housing construction and other infrastructure construction, they are cautious about the future market trend. The Chinese seamless pipe market may be affected by the central government's tight monetary policy, raw material price hikes and the recent global financial turbulence caused by the debt crisis in the US and Europe.
 
Chinese domestic prices of 2"-8" seamless pipes according to GB/8163 are varying at around RMB 5,800-5,900/mt ($910-925/mt) ex-works, including 17 percent VAT. Domestic prices of seamless pipes, 2"-6" grade B as per ASTM A106/API 5L, are at around RMB 6,500-6,650/mt ($1,020-1,040/mt) ex-works.
 
According to the China Iron and Steel Association (CISA), in July this year China produced 2.318 million mt of seamless pipes, less than June's 2.401 million mt but marking an increase of 10.2 percent year on year. Total production for the first seven months of this year was 15.007 million mt, up 12 percent over the same period last year.
 
Current export offers of seamless pipes from Chinese manufacturers for 2"-6" grade B material according to ASTM A106/ASTM A53 are on average at $910-1,000/mt FOB, while 8"-12" seamless pipes are at about $930-1,050/mt FOB. Chinese 2"-10" seamless pipes made to ASTM A106/ASTM A53/API 5L are quoted at around $980-1,030/mt FOB.
 
Export quotations for 4 ½"-13 3/8" casing J55 as per API 5CT, plain ends, are at $1,100-1,150/mt FOB, while 2 7/8"-3 1/2" tubing, plain ends, are at around $1,150-1,200/mt FOB.
 
According to the China Iron and Steel Association (CISA), China exported 454,806 mt of seamless pipes in July, indicating an increase of 16.9 percent from the June level and up 24.2 percent year on year. Exports of seamless pipes from China in the first seven months of 2011 reached 2.599 million mt, up 22 percent on the corresponding period of 2010. However, continuous appreciation of the Chinese currency may curb seamless pipe exports.