In 2013, steel pipe industry demand growth was lower than expected, while production growth remained unabated, resulting in continued oversupply in the domestic market; steel pipe prices fluctuated at low levels, while raw material prices remained high, and companies still faced the severe operating situation of meager profits or losses. However, industry insiders said that the overall market environment for the steel pipe industry in 2014 would be better than in 2013, the popularity of oil and gas pipelines would continue, and "the steel pipe market will continue to grow, and the oversupply situation will ease."

　　Improved steel pipe industry environment in 2014, continued popularity of oil and gas pipelines

　　"The development environment of the steel pipe industry and the oversupply situation in the market will ease (in 2014), but there will be no fundamental changes." Zhong Xidi, secretary-general of the Steel Pipe Branch of the China Steel Structure Association, made the above statement regarding the steel pipe industry in 2014.

　　It is reported that China's current steel pipe production capacity exceeds 100 million tons, and since 2012, the steel pipe capacity utilization rate has been only 75.95%, close to or exceeding the lower limit, indicating overcapacity.

　　Zhong Xidi further explained that judging from the current situation, steady economic growth at home and abroad, and the downstream pipe-using industries will continue to maintain rapid development, coupled with some policies to stabilize growth that have already been introduced in 2013 will further manifest in 2014, demand growth will inevitably drive the steel pipe market to continue to grow, and the overall market environment of the steel pipe industry will be better than in 2013.

　　In terms of steel pipe varieties, industry insiders believe that the demand for pipes in energy industries such as oil and gas pipelines will continue to be popular, driving overall demand for steel pipes.

　　Zhong Xidi said that the demand for pipes in the petroleum and natural gas industry still dominates the demand for pipes in the energy industry. With the further expansion of global oil and gas exploration investment, the demand for petroleum and natural gas pipes will continue to grow, "such as oil well pipes, pipeline pipes, and fluid transport pipes, etc., which continue to drive the overall demand for steel pipes."

　　According to a forecast report from the Metallurgical Industry Planning and Research Institute, China's actual steel consumption in 2014 will be 715 million tons, a year-on-year increase of 3.2%; among them, the energy industry's consumption will be 32 million tons, second only to the automotive industry's 50.2 million tons, with a year-on-year increase of 3.2%.

　　Xu Weidong, deputy general manager and secretary of the board of directors of Yulong Shares (601028.SH), also told DaZhiHui News Agency that the total demand for oil and gas pipelines during the 12th Five-Year Plan period is sufficient, and they are quite confident about 2014 and 2015; there are more than 40,000 kilometers yet to be completed from 2013 to 2015, which is expected to drive demand for oil and gas pipelines by more than 10 million tons, and market demand will accelerate in 2014 and 2015.

　　A securities analyst who has long tracked oil and gas pipelines once told DaZhiHui News Agency that benefiting from oil and gas pipeline networks and urbanization construction, the oil and gas pipeline industry will form a good popularity for 3-5 years starting from 2012.

　　The performance of the three leading listed companies in the A-share oil and gas pipeline sector in the third quarter of 2013 all showed a surge, with net profit growth exceeding 20% in the first three quarters. Yulong Shares (601028.SH), Jiuli Special Materials (002318.SZ), and Jinzhou Pipeline (002443.SZ) had a total revenue of 6.627 billion yuan in the first three quarters of this year, a year-on-year increase of 6.84%, and a combined net profit of 360 million yuan, a year-on-year increase of 26.7%.

　　In 2013, the steel pipe capacity utilization rate was close to the lower limit, and the demand for product upgrading and adjustment was strong.

　　2013 was still a difficult year for the steel pipe industry: overcapacity, high costs, low efficiency, increased trade friction, and the urgent need for product upgrades were all keywords for the steel pipe industry in 2013.

　　Zhong Xidi said that the steel pipe output in 2013 is expected to exceed 80 million tons, but the current capacity utilization rate is close to or exceeding the lower limit, showing overcapacity, but the grade of exported steel pipes urgently needs further adjustment and optimization.

　　"Although steel pipe exports in the first 10 months of 2013 showed a trend of increasing volume and falling prices, the average export price is still far lower than the average import price. The average import price of steel pipes is 3.31 times the average export price." Zhong Xidi said. It is reported that from January to October 2013, steel pipe exports totaled 7.5496 million tons, a net increase of 140,000 tons year-on-year, an increase of 1.97%; steel pipe imports totaled 350,600 tons, a decrease of 7,000 tons year-on-year, a decrease of 1.96%; however, the average export price of steel pipes was US$1203 per ton, and the average import price was US$3986 per ton, with the average import price being 3.31 times the average export price.

Gong Hongliang, executive president of the Shanghai Steel Pipe Industry Association, once publicly stated that in 2012, China exported 6 million tons of steel pipes, most of which were low- and mid-range products, and the demand for upgrading and adjusting steel pipe products was strong.

　　"Currently, there is an oversupply of low-end products in the industry, but the supply and demand of high-end products are basically stable." Xu Weidong said.

　　It is reported that in the first 10 months of 2013, steel pipe production reached 68.311 million tons, a net increase of 6.582 million tons year-on-year, an increase of 10.66%; the apparent consumption of steel pipes was 61.11 million tons, a net increase of 6.42 million tons year-on-year, an increase of 11.74%.

　　The main domestic listed companies involved in steel pipes are Yulong Shares (601028.SH) and Jinzhou Pipeline (002443.SZ); the main Hong Kong-listed companies are Shengli Pipeline (01080.HK) and Zhujiang Steel Pipe (01938.HK).