Steel Pipe Industry Outlook in China

As is well known, the steel industry has long been considered “backbone” in national economy. In China, Tianjin City and Herbei Province are the two major steel pipe production bases. They take up the majority of steel pipe manufacture in domestic market and thus as the “backbone” in steel industry in China.

According to the Industry Research Institute analyses, welded steel pipes have a wide range of applications involving oil & gas exploitation and transportation, water conservancy construction, metal pressure vessel, and etc. Oil and gas exploitation and transportation is its main demand market. Besides, construction application has also been another largest driver of steel consumption. With the development of society and  comprehensive infrastructure projects, construction materials has expanded rapidly. Most steel pipes are to serve the construction sector.

By far, China, as one major steel pipe supplier in the world, with 30 percent of global demand in 2014, was a primary driver of demand growth for steel pipe between 2004 and 2014. And its expansion was mainly involved in all steel pipe markets, especially in OEM, structural, mechanical, and construction fields, and to some extent sparked global steel pipe demand growth.

Generally speaking, round steel pipes are widely used in the oil or gas market. and make up the vast majority of pipes used in oil or gas transportation fields due to its high strength & pressure, and thermal resistance, etc. Furthermore, an increase in demand saw healthy growth during 2009~2014, driven by growth in China and North America. However, advances are expected to decelerate considering current high production and lower oil prices, which will also somewhat impact upon steel pipe prices.

Today, as some uncertainties cloud the outlook for the global steel industry, such as world economic growth, geopolitical tensions, the future evolution of oil and raw material markets, and excess production capacity. In China, based on data from HIS Global Insight, most key steel pipe application demand slowed down in 2014 and it is expected to be lower than that in the past few years for future growth rates between 2015-2016.

Finally, in the long run, the increase in steel pipe demand in China are projected to decelerate significantly. Nevertheless, growth will remain above the global average. In contrast to growth decline in the Chinese market, demand for steel pipes in several other countries in the Asia/Pacific region is probable to accelerate through 2019. Given China’s important role in international steel market, how the country’s steel demand will evolve in the future is currently a highly debated issue.