Chinese seamless pipe prices move down amid low consumption

Quotations of seamless pipes in China have continued to fall down due to low consumption levels. Over the past two weeks, domestic quotations of Chinese seamless pipes have decreased by RMB 100-200/mt ($15-30/mt, currency fluctuations taken into account). Export offers of Chinese seamless pipes have declined by $20-50/mt over the period under review, while export prices for casing and tubing have remained unchanged. Due to the unclear domestic and overseas demand situation, market participants have become more cautious and prefer to wait and observe the market. Seamless pipe prices in China are unlikely to indicate upward movement in the coming short-term period amid unfavorable market conditions.
 
Chinese domestic prices of 2"-8" seamless pipes according to GB/8163 are varying at around RMB 5,800-5,900/mt ($885-900/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 6,000-6,500/mt ($915-990/mt) ex-works.
 
Seamless pipe production in China is growing faster than real pipe demand. This may lead to strong price competition in the market. According to the China Iron and Steel Association (CISA), in February this year China produced 1.76 million mt of seamless pipes, less than January's 2.0 million mt but marking an increase of 21.8 percent year on year. Total production for the first two months of this year was 3.76 million mt, up 19 percent over the same period last year.
 
Current export offers of seamless pipes from Chinese manufacturers for 1"-8" grade B material according to ASTM A106/ASTM A53 are on average at $930-1,000/mt FOB, while ½"-3/4" pipes are at $1,030-1,150/mt FOB. Export quotations for 2"-4" tubing J55 as per API 5CT, plain ends, are in the range of $1,150-1,200/mt FOB, while quotations for 6"-8" casing are at $1,050-1,100/mt FOB.
 
According to the China Iron and Steel Association (CISA), China exported 294,448 mt of seamless pipes in February, indicating a decrease of 17.7 percent from the January level but up 30 percent year on year. Exports of seamless pipes from China in the first two months of 2011 reached 652,241 mt, up 33.8 percent on the corresponding period of 2010. Although exports of seamless pipes from China are likely to continue to rise, export prices are expected to remain at low levels. The current instability in the Middle East and North Africa is likely to affect China's exports of seamless pipe this year.