Chinese seamless pipe market still sees slack demand

Demand for Chinese seamless pipes from both local and foreign buyers remains flat. Traders are in no hurry to buy large tonnages of seamless pipes, while Chinese pipe makers are in no hurry to decrease their offers, preferring to wait until the market outlook becomes clearer. Chinese seamless pipe offers for local customers have not changed so much over the past two weeks: the lower limit has remained at the previous level, while the upper limit has declined by RMB 50-200/mt (maximum $25/mt) amid softer prices for round billets. In particular, current round billet prices in China are at around RMB 5,300-5,350/mt ($820-825/mt) ex-works with 17 percent VAT, RMB 70-100/mt ($10/mt) lower than two weeks ago. Export offers of Chinese seamless pipes, on the whole, have remained within the previous price range. Market players think that a correction in seamless pipe prices may be seen in the coming weeks due to the low transaction volume and the decline in round billet prices. However, the hike in electricity prices in China may provide impetus for an increase in production costs, thereby helping to limit any decrease in seamless pipe prices.
 
Chinese domestic prices of 2"-8" seamless pipes according to GB/8163 are varying at around RMB 5,900-5,950/mt ($910-920/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 6,600-6,800/mt ($1,020-1,050/mt) ex-works.
                                   
Current export offers of seamless pipes from Chinese manufacturers for 2"-8" grade B material according to ASTM A106/ASTM A53 are on average at $880-1,070/mt FOB, while seamless pipes made to API 5L are quoted at $1,000-1,100/mt FOB. Export quotations for 2"-4" tubing J55 as per API 5CT, plain ends, are in the range of $1,200-1,250/mt FOB, while quotations for 6"-8" casing are at $1,100-1,150/mt FOB.
 
The latest statistics indicate that the country's seamless pipe export volume witnessed growth in April. According to the China Iron and Steel Association (CISA), China exported 397,787 mt of seamless pipes in April, indicating an increase of 20.9 percent from the March level and up 43.4 percent year on year. Exports of seamless pipes from China in the first four months of 2011 reached 1.379 million mt, up 32.1 percent on the corresponding period of 2010. With the slow economic recovery in the overseas market, it is estimated China's seamless pipe exports may continue to expand gradually, though they may slacken in summer due to the coming offseason for steel consumption.