Current Situation Analysis of Steel Pipe in China

With a new round of economic growth under China’s recent introduction of a series of new economic policies, the prospect of steel pipe industry in China somewhat makes some progress. China, as the major steel pipe supplier country in the world is playing a more and more significant role in the export of steel pipe to other countries around the world.

With official data reference, in 2015, on the one hand, the capacity of crude steel production was 1.17 billion tons, with an increase of 1.74% year-on-year while the production was 805 million tons with a decrease of 2.2% from the same period of last year. Besides, the consumption was 704 million tons, with 4.7% decline year on year. Thus, the coefficient of utilization of crude steel was 68.8% and excess capacity was 101 million tons. Furthermore, it is estimated that the key steel pipe manufactures have a loss of nearly 100 billion yuan on average and the profit is below 120 yuan per ton. It will be a great challenge to confront them. Therefore, it’s high time to take immediate measures and adopt effective economic policies. Moreover, it will influence the process of industrialization and aggravate burdens for domestic economic development.

In addition, Chinese Ministry of Environmental Protection under the Action Plan for the Prevention and Control of Air Pollution has taken a series of strict action. This has resulted in pressure on steel mills in some major manufacturers on pain of being closed down. For instance, in steel industry, there tends downwards in the amount of cold rolled steel pipes. Pipe suppliers have to respond actively to the current situation.

With reference to steel pipe price, there tends upwards recently. As it is acknowledged, steel pipe pricing is subject to lots of varying factors, including raw material cost, manufacturing technique complexity, market supply & demand as well as national economic policies and so all. For example, in 2008, considering raw materials such as iron ore prices grew, China had to reluctantly agree to price increases by the three largest iron ore producers in the world. As a result, there seems a headache for pipe users to purchase relative welded steel pipes per as their desired pricing.

As we all know, iron and steel industry serves as the second major economic industry in domestic economy system. The steel industry in China has evolved over several decades into one of the biggest base in the world. However, there exists a real fact that the steel industry in China is mainly dominated by a few large state-owned groups with shareholdings by local authorities & government departments or the central authorities. Furthermore, it is still a long way to further improve and advance our national system both in politics and economy. It is well believed that there will have another “spring” in steel pipe market one day in future.