* This posting is the first of a series reviewing the China Steel Pipe market in 2008.

The steel pipe market in China fluctuated greatly during 2008. In the first half of 2008, prices of steel pipes increased substantially with the general rise in raw material prices. From the beginning of the second half of the year, however, prices started to decline in concert with the global financial crisis. Steel mills in China experienced a drop in profitability, and hence reduced production. As the Beijing Olympics ended, winter came quickly for China's steel industry.

1. Output

Total output of steel pipes in China from January to November 2008 amounted to 39.64 million tons, with year-on-year growth of 0.20 million tons. Seamless steel contributed most of the growth rate (92%). The trend of steel pipe output in 2008 was first upwards and then downwards, with the dividing point occurring in July. After declining somewhat in February due to the Spring Festival holiday, output almost reached 4 million tons in June, the highest level of the year. From the following month, however, as demand began to shrink and iron ore and steel product prices started falling sharply, the mills opted for limiting production under pressure of large inventory. In October, output fell to 3.6 million tons, the lowest point for the second half of the year. Output increased again in November on the publication of new policies on export tariff rebate adjustments. The tariff rebate on welded pipes successfully stimulated demand so that production increased by 16% in November. Yet output of seamless steel pipes continued to decline without any successful stimulating factors appearing.