SHANGHAI Chinas steel pipe market will see improved fortunes in 2014 amid steady economic growth and increased demand, according to Zhong Xidi, secretary general of the China Steel Pipe Association.
"Beijing is aiming for stable economic growth, and this will ensure steady development in downstream pipe consumers, boosting demand for steel pipes," Zhong told delegates at a recent conference in Shanghai.
He pointed to a forecast by the China Metallurgical Industry Planning and Research Institute that the countrys steel consumption could reach 715 million tonnes in 2014, up 3.2 percent year on year, with major pipe usersincluding the auto sectorseeing up to 8-percent annual growth.
There also could be a small expansion in overseas trade, given the relatively low Chinese pipe prices, Zhong said.
However, this doesnt mean that the market will see a fundamental change in the short term, as the pipe sector, like Chinas steel industry in general, is still oversubscribed, he warned.
"The capacity utilization rate of steel pipes, especially seamless pipes, is below reasonable levels, which signals severe overcapacity," Zhong said.
Chinas seamless pipe capacity was more than 42 million tonnes in 2012 with a utilization rate of only 67.14 percent, far below the 75-percent bottom line.
The countrys overall steel pipe capacity has exceeded 100 million tonnes as of late December. Production reached 75.95 million tonnes in 2012 and is estimated to hit 80 million tonnes this year, according to CSPA figures.
A version of this article was first published by AMM sister publication Steel First.