China’s steel pipe industry faces overall overcapacity, while still relying on imports for some high-end steel pipes. According to calculations based on data from Mysteel and World Metal Bulletin, the capacity utilization rate of welded steel pipes in China was only 69.21% in 2021. In 2022, the utilization rate for seamless steel pipes was merely 58.19%, below the internationally recognized reasonable level, reflecting overcapacity in China’s steel pipe industry. However, China still needs to import certain steel pipes, with imported pipe prices significantly higher than exported ones. Customs data shows that from January to July 2023, the price difference between imported and exported steel pipes reached $5,033.82 per ton, indicating that China’s imported steel pipes are mainly high-end, high value-added products.

The domestic oil and gas pipe industry has relatively low concentration, with high-end non-API products still lagging behind foreign leaders. We calculate that in 2021, the CR3 and CR5 of China’s oil well pipe industry were 33% and 47% respectively. Currently, there are still many small-scale oil and gas pipe manufacturers, leading to low industry concentration and homogeneous competition. While China’s API products have gained some cost and price advantages, achieving exports to the Middle East, Africa, North America, and Central Asia, high-end non-API products still lag behind foreign leaders like V&M and Tenaris in quality, performance, and diversity.

The domestic high-pressure boiler pipe industry is highly concentrated, while the low and medium-pressure boiler pipe segment is fully competitive. We estimate that the CR3 and CR5 in the high-pressure boiler pipe segment are 42% and 62% respectively, indicating relatively high concentration. However, the low and medium-pressure boiler pipe production has lower entry barriers, smaller overall market size, and is a fully competitive market segment.

Demand for oil & gas pipes and boiler pipes remains robust, benefiting leading companies with competitive product advantages. Since 2020, oil prices have been gradually rising. OPEC+ production cuts in 2023-2024 will support oil prices, likely maintaining strong demand for oil and gas pipes. Additionally, the new round of thermal power policy benefits is driving a new cycle of demand for thermal power boiler pipes. The increasing share of unconventional oil and gas exploration and accelerated construction of ultra-supercritical power units will particularly drive accelerated growth in high-end product demand. We expect leading companies with stronger R&D capabilities and competitive product advantages to fully benefit.

Key recommendations include:

  1. CITIC Special Steel, which has significantly expanded its steel pipe capacity through the acquisition of Tianjin Steel Pipe.
  2. Leading steel companies with large steel pipe production capacities, such as Baosteel and Hualing Steel.
  3. Changbao, a leader in small and medium-diameter oil well pipes and boiler pipes.
  4. Shengde Xintai, a leader in thermal power boiler pipes.
  5. Jiuli Special Materials, known for high technical barriers and high value-added steel pipe products.

These companies are well-positioned to capitalize on the industry trends and demand growth in the oil & gas and boiler steel pipe sectors.