07.06.2021

Chinese Companies Will Have to Free Some Space in the Seamless Tube Market

Peter Gorban Head of Centravis Regional Sales in Asia, Middle East and Central Europe

China has canceled seamless tube export benefits. Dumping opportunities for Chinese manufacturers have decreased.

The news that China has canceled export benefits for its manufacturers of seamless tubes, as well as for more than 140 other types of steel products, have passed since May 1 without being duly noticed. This news was unfairly not paid attention to, since the refusal of Chinese government to refund VAT in the amount of 13% will certainly affect Ukrainian and world markets.

Remember the “butterfly effect”, where the flap of a butterfly wing on one continent can affect the events on another one? This is exactly the case.

Chinese seamless tube production cost increased by 15% (no 13% VAT refund plus 2% tax). As a result, dumping opportunities for Chinese companies have decreased.

If previously some Ukrainian consumers bought Chinese tubes only due to the fact that they were cheaper not paying much attention to the quality aspect, now the price difference between Chinese and Ukrainian tubes will become almost indistinguishable. And taking into account the import costs for Chinese tubes, many consumers will think whether it is necessary to save 5-10%, if it is possible to buy tubes in Ukraine, which is much better and faster.

Thus, the trends in Ukrainian seamless tube market are likely to change in the coming months. If Chinese tube accounted for almost a half of all imports during the last month, this year it will be difficult for Chinese manufacturers to maintain their market share.

As a matter of fact, import volume may also significantly decrease. In 2020, imports accounted for two-thirds of all seamless tube consumption in Ukraine, which is too much for a country like ours, which seeks to promote “Made in Ukraine” brand in the domestic and foreign markets.

I would also like to note that as a Company from the list of the World’s Top 10 Seamless Tube Manufacturers, we will have more opportunities for a high-quality competition in the global market. When benefits are canceled, the matter of quality comes out to the first place; and we are 100% sure of our quality.

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