During the last two weeks quotations of Chinese welded pipes have changed their direction and started to go down. Lower demand for welded pipes from both domestic and foreign customers as well as falling flat prices have caused a decrease of $20-30/mt in export prices over the past two weeks and a maximum fall of RMB 100/mt ($10/mt) in domestic quotations during the same period.
Current domestic prices of Chinese ERW pipes 2"-6" Q215-Q235 grade are at RMB 4,500-4,800/mt ($660-700/mt) ex-works. These local market prices include 17 percent VAT and are on actual weight basis.
Export offers of Chinese ERW pipes, 2"-6" grade B according to ASTM A53/API 5L, are being given at about $650-700/mt FOB.
Welded pipe prices in China are expected to go down as inventories have piled up and also due to concerns that the government may curb lending. Chinese welded pipe mills are facing many difficulties as production costs rise, as sales volumes decrease due to the credit squeeze and as inventory builds up. The Chinese government plans new measures to rein in the overcapacity in steel, cement and other industries caused by increases in bank lending.
At the same time, the general sentiment in the market is positive. The recovery of China's economy combined with rising raw material prices, in particular for iron ore and coke, is expected to support a rise in Chinese domestic steel prices this year. China's economy continues to pick up, and so domestic demand for steel pipes should increase this year. The International Monetary Fund forecasts China's growth will accelerate to 10 percent this year, from 8.7 percent in 2009.