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| Prospects Of China's WEPP-2 UO Pipe Deals For 2009 Shipments |
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There is a possibility that China National Petroleum Corp (CNPC) will start its negotiations within this year on UO pipe deals for shipments in 2009 concerning China's new West-East natural gas pipeline project (WEPP-2) because CNPC is contemplating forming a budget in October for construction of the east part of WEPP-2, according to information made available in Tokyo. As a result, it is likely that Japan's integrated steelmakers will offer UO pipe exports to CNPC at US$2,000/ton FOB or beyond when the two sides enter negotiations, market sources believe. Until now, CNPC has bought a total of 230,000-240,000 tons of UO pipes from Japan at around US$1,500/ton FOB for construction of the west part of WEPP-2. UO pipe requirements in WEPP-2 are estimated at a total of 800,000 tons for the X80 grade and 600,000 tons for the X70 grade. Japanese integrated steelmakers are setting their sights on the X80 grade in the UO pipe exports they negotiate with CNPC in relation to line pipe supplies for WEPP-2. The Japanese steelmakers believe that CNPC will place almost all of its orders for X70 UO pipes with Chinese steel mills. So far, CNPC is said to have allocated the bulk of its budget to oil development projects at home, with gas development plans on the back burner. There is information, though, that CNPC is contemplating budgeting for construction of the east part of WEPP-2 in October. As a result, there is a possibility that CNPC will begin purchasing the UO pipes it requires before transaction prices of UO pipes move up as in the case of heavy plates. Steel market conditions in Asia indicate uncertain prospects of demand for sheet products in manufacturing industries such as autos and consumer electronics. In contrast, heavy plate demand is in fairly good shape in sectors such as energy development and shipbuilding. As a result, it is considered certain that transaction prices of heavy plates will advance toward next year. As things now stand, there are forecasts that the Japanese steelmakers will attempt a price level of US$2,000/ton FOB or beyond in the UO pipe exports they negotiate with CNPC for shipments in 2009. In this connection, a Japanese export deal of heavy plates for Russia recently shaped up at US$1,700/ton FOB for UO pipe material. |
| last modified : Wed 20 Aug, 2008 [12:28] |
