The Chinese welded pipe market has become weaker as the winter off-season approaches. Compared with the strong ups and downs in September, domestic welded pipe prices have basically remained steady over the past two weeks, though with some decreases by a maximum of RMB 100/mt ($5-20/mt). Demand for welded pipes from local consumers has slowed down after the high season period during September-October and the domestic welded pipe market is now facing the challenge of high inventory. The market outlook for November is poor owing to the weak demand from end-users. With winter coming, construction activities are expected to be suspended. International demand for Chinese welded pipes also remains extremely weak. Over the past two weeks export offers of Chinese welded pipes have dropped by $30-50/mt. Nevertheless, welded pipe suppliers in China do not expect further price declines due to the production restrictions caused by countrywide limitation of electricity supply. The production cost of welded pipes will keep going upward in the future on the back of the high price levels of iron ore and coal.
Current offers of locally produced welded pipes, 2"-6" Q215-Q235 grade, are being given to the domestic market at an average of RMB 4,400-4,700/mt ($660-705/mt) ex-works, while 2"-6" welded pipes of grade B as per ASTM A53 are at RMB 4,700-5,200/mt ($705-780/mt) ex-works. These local market prices include 17 percent VAT.
According to the China Iron and Steel Association (CISA), in September China produced 2.922 million mt of welded pipes, less than August's 2.934 million mt and marking a decrease of 21.1 percent year on year. Meanwhile, China's welded pipe production in the first nine months of this year reached 24.702 million mt, up 6.7 percent on the corresponding period of last year. The ongoing campaign to meet year-end energy efficiency targets will continue to prevent steel production from rising too rapidly.
Current export prices of Chinese welded pipes, 2"-6" grade B according to ASTM A53, are varying at around $700-750/mt FOB on actual weight basis.
According to the China Iron and Steel Association (CISA), in September this year China exported 222,472 mt of welded pipes, indicating an increase of 21.5 percent from August level and up 0.02 percent year on year. China's total welded pipe exports in the first nine months of this year reached 1,970,671 mt, up three percent year on year. With the strengthening of the Chinese currency and low demand from foreign customers, China's welded pipe exports are expected to drop in the fourth quarter of this year.