Current offers of local production welded pipes, 2"-10" Q215-Q235 grade, are being given to the Chinese domestic market at an average of RMB 4,200-4,500/mt ($615-660/mt) ex-works, compared to RMB 3,820-4,100/mt ex-works two weeks ago. These local market prices include 17 percent VAT. Though demand for welded pipes in the domestic market has not recovered sufficiently, ERW pipe prices are unlikely to drop by any significant margin as long as the prices of input materials remain strong. Pipe mills are feeling pressure from suppliers of flat products, which are now offering HRC at RMB 3,800-4,050/mt ($560-590/mt) ex-works to the domestic market. Pipe makers say that they have no choice except to raise their prices; however, they do not expect to make big profits. Traders inform SteelOrbis that they have not yet observed any increase in orders from the construction industry, but they are hoping for an improvement in demand as many new projects have been started recently.
According to the China Iron and Steel Association (CISA), in June China produced 2.76 million mt of welded pipes, higher than May's 2.51 million mt, and marking an increase of 8.6 percent year on year. Meanwhile, China's welded pipe production in the first six months of this year reached 13.57 million mt, up 13.1 percent on the corresponding period last year.
On the other hand, current export prices of Chinese welded pipes, 2"-8" grade B according to ASTM A53/API 5L, are varying at around $720-780/mt FOB, compared to $650-700/mt FOB one month ago. However, exports of Chinese welded pipes are at very low levels. Pipe producers prefer to produce more common grades for domestic demand and to halt production of API pipes for the export market. According to the CISA, in June China exported 191,440 mt of welded pipes, indicating an increase of 16 percent on the May level (which was the lowest in three years) but down 38 percent year on year.