China's stimulus spending worth US$586 billion has boosted steel demand from local automakers, home appliance manufacturers and builders. The spending helped the domestic steelmaking industry to once again record a profit in May, after seven straight months of losses caused by the global economic crisis. Meanwhile, over the past several weeks, market demand for welded steel pipe has weakened in China on account of the bad weather in most areas of the country, with reduced numbers of transactions recorded. However, domestic welded pipe prices have risen by RMB 100/mt ($10/mt) over the past two weeks due to increasing raw materials prices.
Current domestic prices of Chinese ERW pipes 2"-6" Q215-Q235 grade are at RMB 4,600-4,800/mt ($670-700/mt) ex-works. These local market prices include 17 percent VAT and are on actual weight basis.
Export quotations of Chinese welded pipes have increased by $30-50/mt over the past two weeks in line with domestic prices, though demand from foreign customers remains low. Export offers of Chinese ERW pipes, 2"-6" grade B according to ASTM A53/API 5L, are being given at about $680-720/mt FOB. Impacted by the weak demand in the global market and the successive antidumping investigations launched by European and American countries, China's welded pipe exports can expect to face more severe challenges in the future.
Market insiders think that the Chinese welded pipe market may strengthen at a gradual rate because of the imbalance between production and demand, between oversupply and restricted exports. The domestic welded steel pipe market may at least maintain a relatively stable trend this year, retaining the possibility of further upward movement. The anticipated increase in raw material quotations will push welded pipe mills to raise their ex-works prices and stimulate some traders and end-users to build up stocks for speculative purposes.