Chinese welded pipe prices slide down but upturn may be in the offing

Welded pipe demand for Chinese welded pipes has not improved significantly. Domestic welded pipe prices have declined by RMB 50-100/mt over the past two weeks, while export quotations of Chinese welded pipes have remained almost unchanged over the same period. Market participants expect to see a slight increase in welded pipe prices in the coming period due to an anticipated reversal of the downward trend in the raw material market. However, demand is currently insufficient to support a significant increase in welded pipe prices. Meanwhile, the coming high season for construction and the increasing production of the electronic household appliance and auto industries give hope to Chinese welded pipe suppliers for a revival of demand.
 
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 4,600-4,900/mt ($700-750/mt) ex-works, while 2"-6" welded pipes of grade B as per ASTM A53 are at RMB 4,900-5,100/mt ($750-780/mt) ex-works. These local market welded pipe prices include 17 percent VAT.
 
Due to the seasonal winter lull and the lunar New Year holidays, China's welded pipe output declined in February this year. According to the China Iron and Steel Association (CISA), in February China produced 1.838 million mt of welded pipes, less than January's 2.390 million mt but marking an increase of 26 percent year on year. Meanwhile, China's welded pipe production in the first two months of this year reached 4.228 million mt, up 14.6 percent on the corresponding period of last year. However, market insiders believe that welded pipe output in China will continue to rise due to newly-installed facilities in the country, what may lead to oversupply in the market and downward pressure on prices.
 
Current export prices of Chinese welded pipes, 2"-6" grade B according to ASTM A53, are varying at around $750-780/mt FOB on actual weight basis.
 
According to the China Iron and Steel Association (CISA), in February this year China exported 201,900 mt of welded pipes, indicating a decrease of 36 percent from the January level but up 12 percent year on year. Exports of welded pipes from China in the first two months of 2011 reached 517,900 mt, up 37.4 percent on the corresponding period of 2010.