Welded pipe market in China has not shown any sign of recovery over the past two weeks. Despite anticipations for a demand revival, transactions are still quite slow. The high cost of funds dampens the trading activities in the domestic market, while demand from Europe and Southeast Asia is weak amid the devaluation of national currencies. Chinese welded pipe producers have been forced to cut their domestic and export offers due to sluggish demand and falling quotations of feedstock material. Export welded pipe prices have declined by a minimum of $20/mt over the past two weeks. The upper end of Chinese domestic prices for welded pipes has decreased by RMB 50/mt ($5-10/mt) over the analyzed period, but the lower end has remained at the previous level.
Welded pipe market in China will unlikely have a good performance by the end of the year given the tightening of liquidity and the weakening demand. According to Ministry of Housing and Urban-Rural Development ( MOHURD), the peak period of starting the affordable house construction is nearing end, weakening its demand pull for welded pipes. Demand from foreign customers, especially from Europe, will likely remain sluggish on the back of the financial debt crisis. However, market players hope for some revival in the domestic welded pipe market by the middle of October after the national holidays in China. Until then, welded pipe suppliers hope to maintain their offers at the present levels.
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 4,900-5,150/mt ($765-805/mt) ex-works, while 2"-6" welded pipes of grade B as per ASTM A53 are at RMB 5,600-5,650/mt ($875-885/mt) ex-works. These local market welded pipe prices include 17 percent VAT.
According to the China Iron and Steel Association (CISA), in August this year China produced 3.386 million mt of welded pipes, more than July's 3.253 million mt and marking an increase of 26.8 percent year on year. Meanwhile, China's welded pipe production in the first eight months of this year reached 24.825 million mt, up 25.6 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 $840-850/mt FOB on actual weight basis, while 10"-18" welded pipes are at $870-950/mt FOB.