Chinese seamless pipe industry is through with weakness theme from Janaery to April in 2014,
even though driven by commodities price rebound in early and middle April, it displayed tentative rise. Basically, the depressing market is because of high production along with weak demand. Struggling with tiny profit margins, Those Producers are trying all they can to improve production to fight for the mere profits, which lead to further intensifies market competitions.
Supply exceeds demand home and abroad
Oversupply issue has become increasingly fierce from 2011. Increased via the violent capacity release in 2008, seamless steel pipe output amount grown fast, along with the expanding of abroad market, more and more countries began to release anti-dumping on China’s steel pipes. The problems are going to be more awkward following the commission of TMK’s pipe plant in Saudi Arabia this year as Chinaˉs export to Middle-east areas is under risks of being complained.
The Report showed that Chinaˉs seamless steel pipe production amount is hanging at high levels at this point in 2014, particularly in March when output quantity saw a m-o-m increase of 36.79%, much higher compared to the 20% rise in normal years. The high output weighs on spot market heavily. But Steel Pipe mills are not still targeting at no relax of production in April, leading to the surmise that pipe production would continue to peg at high level in Q2 this year.
Chinaˉs export of seamless steel pipe was decreasing in Q1, 2014, down by 6.02% y-o-y and the export amount was recorded the steepest slope in Feb throughout y-o-y and m-o-m comparisons. It tumbled 34.91% from the same period in 2013 and dropped 45.35% m-o-m.
Imports, on the comparison, are beefing up from 2013. China totally imported 227,400 tonnes of seamless steel pipe in 2013, increasing by 4.91% y-o-y, and the import volume of seamless pipe bounced off up to 51.88% to 67,400 tonnes in the first 3 months in 2014.
Seamless Pipe market may rebound in Q3, 2014
At present, Chinaˉs seamless steel pipe market has fallen to the lowest since 2009, and the downbeat tendency seems far from ending. The depressing Q2 isn’t just a single phenomenon this year, as the Q2s from 2011 have all been witnessing falling pipe markets, but prices could manage to rally or the downward drifting was trending to reduce in Q3s in the past three years. So it is surmised that pipe market would be more prone to grow in Q3.
As a relatively downstream product type across the steel industrial chain, seamless pipes are likely to carry out later than other kind of steel products, which causes the product move less violently than others like rebar or hot rolled coil. However, it shouldn’t be ignored that this year domestic pipe need would be promising. The state is strengthening investment in Middle and West areas and demand for seamless steel pipe in these regions would leap forward. Thus Q3 will be a season enjoying lots of opportunities.