Chinese welded pipe prices keep falling

Most Chinese producers of welded pipes continue to cut their offers amid poor demand from both local and foreign buyers. Domestic prices for locally produced welded pipes have declined by RMB 100-200/mt ($10-30/mt) over the past two weeks, while export offers have decreased by $20-30/mt. Although Chinese domestic hot rolled coil (HRC) prices have lately become firmer, conditions may worsen in the coming two months. Despite a possible minor rebound in welded pipe quotations amid higher prices of flat steel, the overall downward trend will not change. Buying activity in the domestic market will be slow against the background of China's tough monetary policy and low construction activity in the country in the coming winter, while the European debt crisis is expected to cause a further slowdown in welded pipe exports from China. Market players remain pessimistic as regards the future prospects for the steel market and believe that welded pipe prices may drop further at the end of the year, impacted by factors such as declining steel demand, tight credit availability, and falling raw material costs.
 
Current offers of locally produced welded pipes, 2"-6" Q215-Q235 grade, are being given to the Chinese domestic market at an average of RMB 4,500-4,800/mt ($710-755/mt) ex-works, while 2"-6" welded pipes of grade B as per ASTM A53 are at RMB 5,300-5,500/mt ($830-865/mt) ex-works. These local market welded pipe prices include 17 percent VAT.
 
Due to the expectation of a seasonal pick-up in welded pipe demand, in September this year China produced 3.83 million mt of welded pipes, more than August's 3.386 million mt and marking an increase of 37.1 percent year on year. Meanwhile, China's welded pipe production in the first nine months of this year reached 28.761 million mt, up 26.5 percent on the corresponding period of last year.
 
Current export prices of Chinese welded pipes, 2"-8" grade B according to ASTM A53, are varying at around $780-800/mt FOB on actual weight basis, while 10"-18" welded pipes are at $800-900/mt FOB.
 
According to the China Iron and Steel Association (CISA), in September this year China exported 248,107 mt of welded pipes, indicating a decrease of 6.5 percent from the August level but up 11.5 percent year on year. Exports of welded pipes from China in the first nine months of 2011 reached 2,529,719 mt, up 28.4 percent on the corresponding period of 2010.