August 30, 2008

Analysis of steel pipe production and consumption in China

Welded pipe and seamless pipe are the two major categories of tubular products in China. As seamless pipe contains a portion of cold drawn pipe that's processed from hot rolled steel and welded pipe includes a part of the galvanized tube, statistics offered by the National Bureau of Statistics actually has double counting but the double counted part is believed small and therefore this article's analysis is still based on the NBS statistics.

Through August 2007, China's output of seamless steel pipe amounted to 12.24 million tonnes up by 24%YoY with annualized production forecast at 18.5 million tonnes; during this period, the welded pipe came to 14.93 million tonnes, up 13.4%YoY with annualized output estimated at 23 million tonnes . Over all, the domestic pipe production increases at the pace of 20% annually. Totaled output in 2007 as predicted will be fourfold of 2001 figure.

China's pipe production from 2001

Year	2001	2002	2003	2004	2005	2006	2007 F
Welded pipe	6.4	7.8	10.3	13.0	17.4	20.0	23.0
Seamless Pipe	5.3	6.0	7.3	9.0	11.4	14.8	18.5
Total	11.7	13.8	17.6	22.0	28.9	34.8	41.5
Growth rate	25%	18%	27%	25%	31%	20%	19%

In million tonnes

On the export front, China was a net pipe importer before 2003 and its export surge took place in 2005. In the first eight months of 2007, China exported 2.48 million tonnes welded pipe up by 30%YoY while imported 110,000 tonnes down by 40% YoY. Annualized welded pipe export is forecast at 3.47 million tonnes, import at 170,000 tonnes, presenting some 3.3 million tonne net import. On welded pipe, export in the first eight months reported 2.537 million tonnes up by 76.4%YoY import 368,000 tonnes down by 24%YoY and annualized export is forecast at 3.75 million tonnes & import at 550,000 tonnes.

Import & Export of Steel Pipe

Year	2001	2002	2003	2004	2005	2006	2007F
Welded Pipe Export	27	28	57	93	165	337	347
Welded Pipe Import	36	85	65	63	40	27	17
Net export	-9	-57	-8	30	125	310	330
Seamless Pipe Export	41	41	56	75	139	250	375
Seamless Pipe Import	45	52	47	69	68	69	55
Net export	-4	-11	9	6	71	181	320
Total Export	68	69	113	168	304	587	712
Total Import	81	137	112	133	108	96	72
Net Export	-13	-68	1	36	196	491	650

Major pipe consuming industries include construction, petroleum, natural gas, chemicals, boiler, coal, electricity, automobile and mechanical engineering etc, growth of which boosted China's pipe consumption boom. The pipe consumption records higher growth rate than that of steel products. Pipe Production & Consumption 2000-2007 is as under

Year	Domestic output	Import	Export	Consumption	Consumption growth
2000	938	66	61	943	18.5%
2001	1176	71	68	1179	25.0%
2002	1307	137	69	1375	16.6%
2003	1764	112	113	1763	28.2%
2004	2209	132	168	2173	23.3%
2005	2891	108	304	2695	24.0%
2006	3493	96	587	3002	11.4%
2007F	4150	72	722	3500	16.6%

The ratio of steel pipe out of steel products consumption 2000-2006

Year	2001	2002	2003	2004	2005	2006	2007
Welded pipe	649	758	1039	1271	1622	1699	1970
Seamless pipe	540	617	724	902	1063	1304	1530
Total	1189	1375	1763	2173	2685	3003	3500
Crude steel	17000	20500	25600	30200	34700	38700	42700
Pipe's percentage	7.00%	6.71%	6.89%	7.20%	7.74%	7.75%	8.20%

China's seamless pipe enterprises began expansion from 2004. By end of 2006, the nation's capacity of these products reached 16.5 million tonnes. As the world's first producer, China has over 300 seamless steelmakers, a part of which possess first rate manufacturing technology and most advanced facilities, bringing domestic sufficiency close to 90%. Larger makers include Baosteel, Tianjin Steel Pipe, Baotou Steel, Pangang Chengdu Seamless Pipe, Valin Hengyang, Anshan Steel, Yantai Lubao etc. On production of tubular billet/slab, Tianjin Steel Pipe, Baosteel, Baotou Steel, Hengyang Pipe, Anshan Steel Panzhihua Steel, Yegang and Tonggang etc are the most important.

Domestic tight supply was eased gradually from last year thanks to increase in tubular billet/slab availability. From this year, the supply is poised to balance demand or go a little excessive.

On welded pipe, the producers are distributed more scattered, bulk of which are privately owned and have a relatively big capacity. Yet, many productions are affected by seasonal factors and actual output can be less than the total capacity of 37mt. The three major groups are ERW, LSAW and SSAW. ERW accounts for around 80% of the total welded pipe production capacity.

(Sourced from MySteel.net)