Chinese steel pipe market impacted by slow activity and lower upstream costs

The Chinese domestic steel pipe market has seen decreases in prices of both seamless and welded pipes in the past week. 
 
As of September 25, in China's three main steel markets, i.e., Shanghai, Guangzhou and Beijing, the average price of 20# (GB/T8162-1999) grade 108 mm x 4.5 mm seamless pipe now stands at $594/mt, with 20# (GB/T8163-1999) grade 219 mm x 6 mm seamless pipe at $624/mt. Meanwhile, on the same date, Q195-215 grade 48 mm x 3.25 mm welded pipe and Q215-235 grade 114 mm x 3.75 mm welded pipe prices in the above markets are standing at $504/mt and $517/mt respectively. All the above prices include 17 percent VAT.
 
Chinese domestic seamless pipe prices have decreased by relatively significant margins in the past week, while the overall trading volume has remained low. Declines in billet prices and reductions in mills' seamless pipe quotations are the main factors contributing to the market price decreases, in addition to the slack demand situation. Traders consider prices are already at very low levels but, with the decreases in upstream costs, there is further room for downward price movement and so the soft trend in the domestic seamless pipe market is expected to continue in the week ahead.
 
The local Chinese welded pipe market has also declined during the past seven days, influenced by decreases in steel strip prices. Overall trading activity has remained sluggish even though September has traditionally been a good month for business. Sentiment among traders is mostly negative. It is believed that the Chinese welded pipe market will continue its downward trend in the coming week amid the overall soft movement of steel prices in China.