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In the first half of 2023, China's steel pipe production and apparent consumption both showed high year-on-year growth, but structural contradictions remained prominent. High production costs and overcapacity led to increasingly fierce industry competition, and the profitability level of the industry was at a low level. There was a clear contrast between the growth of operating efficiency of domestic steel pipe enterprises and the growth rate of steel pipe production.
From an industry perspective, due to the prominent contradiction of overcapacity in the current steel pipe industry, new and planned steel pipe units and production lines continue to emerge. The Steel Pipe Branch calls on enterprises to invest rationally and not simply expand production capacity with the aim of increasing output. In response to the prominent supply-demand contradiction in the current market, steel pipe industry enterprises urgently need a good self-discipline environment, abide by the business principles proposed by the China Steel Association of "production determined by sales, efficiency, and immediate sales", respect the laws of the market economy, take the path of transformation, upgrading, and high-quality development, and meet the challenges brought by low-carbon transformation to the industry.
In the first half of the year, China's steel exports increased by 31.3% year-on-year, while steel imports decreased by 35.2% year-on-year. It is expected that the growth rate of steel exports will continue to increase throughout the year. At present, steel exports mainly face three major challenges: firstly, the RMB exchange rate has been at a low level since 2008, intensifying competition among export enterprises and increasing price pressure among peers; Secondly, the export prices of steel in China are generally lower than the market prices of export destinations, which can easily lead to trade frictions; Thirdly, in the current difficult task of low-carbon transformation in the steel industry, effective regulation of steel exports will be the main target for controlling production in the second half of the year.
In the situation where the main indicators of real estate continue to decline, some steel varieties are shifting towards producing seamless steel pipes and welded steel pipes. In the future, the contradiction between China's steel pipe supply and consumption will become more prominent. From a global perspective, China's steel pipe exports are mainly from Asian countries, accounting for about 67% of the total export volume. The top 15 destination countries for steel pipe exports are all Asian countries, and the fastest growing consumption is in Southeast Asia, South Asia, and Southwest Asia. There is still a significant gap, which is a very important opportunity for China's steel pipe industry.
Production situation of steel pipes in the first half of the year
According to data released by the National Bureau of Statistics, China's crude steel production in the first half of the year was 536 million tons, a year-on-year increase of 1.3%. During the same period, the apparent consumption of crude steel decreased by 1.9% year-on-year. However, the production of steel pipes and apparent consumption increased significantly against the trend, showing a "double increase" development trend since 2022. In the first half of this year, China's steel pipe production was 48.67 million tons, a year-on-year increase of 12.2%, and the apparent consumption was 43.6747 million tons, a year-on-year increase of 9.76%, the largest increase among the 21 major varieties of steel.
Among them, the production of seamless steel pipes was 17.35 million tons, a year-on-year increase of 13.77%, and the apparent consumption was 14.4176 million tons, a year-on-year increase of 8.1%; The production of welded steel pipes was 31.32 million tons, a year-on-year increase of 11.4%, and the apparent consumption was 29.257 million tons, a year-on-year increase of 10.7%.
Import and export situation of steel pipes in the first half of the year
According to customs data, China exported a total of 43.58 million tons of steel in the first half of the year, a year-on-year increase of 31.3%. The export of steel pipes has continued to rise, with a cumulative export volume of 5.0921 million tons in the first half of the year, a year-on-year increase of 37.07%. The export volume of steel pipes in China continues the high growth trend of last year.
The import and export situation of seamless steel pipes
The outbreak of the Russia Ukraine war has affected most countries around the world, disrupting the original industrial and supply chains. In 2022, Russia's steel pipe production decreased by 4.2 million tons, a decrease of 33%, and some export orders from Russia were transferred to other countries. In addition, some developing countries (mainly in Asia) around the world have slowly recovered from the pandemic, with manufacturing margins improving and import steel pipe orders more willing to seek stable domestic suppliers. In addition, China has a competitive advantage in steel pipe prices.
From the perspective of foreign trade relations, the recovery level of the global market is still uneven. One of the reasons for the growth of China's steel pipe exports in the first half of the year is that over 70% of China's major exporting countries are developing countries, with a relatively small proportion exported to developed countries. In the first half of the year, China's oil well pipe exports reached a historically high level since 2008. The high-end products of welded steel pipes are moving overseas, and the average export price is close to the average export price of seamless steel pipes. Continuously increasing the export proportion of value-added products will be an important way out for the future development of the steel pipe industry.
OPEC predicts that global crude oil demand will increase by 2.44 million barrels per day in 2023 and 2.25 million barrels per day in 2024. At present, the oil price is still at a high level, which will drive the global oil and gas exploration investment to resume growth and exceed the pre epidemic level. The global energy mining output, especially the expansion of offshore drilling and production, will drive the increase in the demand for energy pipes, of which the demand for oil well pipes will be the highest level in 2014. It is expected that China's steel pipe exports will continue to grow in the second half of this year. In addition to the increase in the export of energy pipes, other steel pipe exports will also maintain a large growth and export varieties will be more diversified.