“Made in China 2025” Plan will Drive A New Round of Development Opportunities in China’s Tube & Pipe Industry

As per the strategic goal of “Made in China 2025” and the "Internet Plus" action plan,intelligent manufacturing will dominate the top-level design and roadmap of Chinese steel pipe industry during the 13th Five-Year Plan period, thus giving priority to promoting a digital, web-based and intelligent production of steel tubes.

Statistics showed the total output of steel pipes in China reached 88.98 million tons in 2014, a 5.44% increase (4.59 million tons) compared with last year; apparent consumption of steel pipes was 80.06 million tons, a 5.62% rise (4.26 million tons) compared with last year; export volume of steel pipe was 9.38 million tons, jumping 4.24% (0.38 million tons) over last year. The 13th Five-Year Plan and “One Belt And One Road” will bring good opportunities for the development of steel pipe industry.

Hotspot Fields Lead the Future Direction of Tube Industry

1. Auto Industry

Application of Seamless Steel Pipes in Automotive Manufacturing

Seamless steel pipes are extensively used in automobiles. They are used for automotive exhaust systems, rear axle of the chassis, front axle assembly of the chassis, air-conditioning system, steering damp assembly, liquid storage, transmission system, seats, side guard door beams and etc.

Automobile high-strength fasteners are also made of stainless seamless steel pipes. As critical auto parts, domestic supply of high-strength fasteners in China is less than 25% and most are imported from foreign countries. Currently, Baosteel (one of the most famous steel manufacturers in China) and other domestic enterprises are optimistic about the market, and committed to the development of stainless seamless steel pipes.

According to Energy-saving and New Energy Automobile Industry Development Plan (2012-2020), till 2020, BEV and plug-in hybrid electric vehicle (PHEV) production capacity is estimated to reach 2 million vehicles,with cumulative production and sales exceeding 5 million vehicles. The demand for seamless steel pipes in automobile industry will be further released.

Among the imported vehicles or components, about 2/3 automotive-specific seamless steel pipes are high-precision welded seamless steel pipes and high-precision welded cold-drawn (or cold-rolled) seamless steel pipes. But in China, these products lag behind in development and still depend on import.

2.  Oil and Natural Gas Transmission Pipelines

New-type Urbanization will propel the development of urban gas pipe networks and product oil (gasoline and diesel oil) pipe networks. By the end of the 12th Five-Year Plan, the total length of urban gas pipelines in China reached 600,000 kilometres. China's demand for natural gas will rise to 314 billion cbm in 2020 from 178 billion cbm in 2014, predicted by the International Energy Agency in Medium-Term Gas Market Report.

National Strategy on Energy Efficiency and raising clean energy consumption will highlight oil and natural gas transmission pipelines construction, which will lead to rapid growth of steel pipe output. Oil and natural gas transmission pipelines will keep steady increase in the next decade and the value of energy infrastructure market will reach RMB 2 trillion (USD 33 billion).

China-Russia East-Route Natural Gas Pipeline: Construction Program and Steel Pipe Selection Agreed

The preparation and examination of the feasibility study report has been currently completed for the China-Russia East-Route Natural Gas Pipeline, and the technical solutions for the critical parts of the pipeline have been identified. It is estimated that preliminary design revisions will be finished before the end of April and national approval by Russia will be obtained in August, 2016.

China and Russia have completed 15 rounds of talks on critical parts and currently, both sides have reached consensus on construction program and steel pipe selection. Subsequently, both sides will negotiate on selection of construction unit, engineering budget and other issues.
Reportedly, land pre-examination and environmental impact assessment reports for the pipeline have been reported to relevant national authorities for approval, entrusted construction agreement has been signed and all construction procedures are being actively handled.

3. Electric Power Industry

Thermal Power Industry

Thermal power industry has been playing an absolutely dominant role in China's power structure, accounting for over 70% in both installed capacity and annual power generating capacity. In China, installed capacity of thermal power will keep growing rapidly for a long time.

Nuclear Power Industry

Currently, nuclear power in China embraces acceleration period with brilliant prospect. By 2020, the installed capacity of the nuclear power units in operation is aimed to 58 million kw. It means additional capacity of 35 million kw needs to be built before 2020; an average of 5~6 units should be put into operation every year and an investment of 500 billion yuan will be increased. Moreover, the steel pipes or alloy pipes used by nuclear power units differ from types of reactors.

4. Petroleum Refining and Chemical Industry

In recent years, Chinese petroleum refining and chemical industry had a rapid development and the scale of oil refining ranked the second place in the world. The total consumption of petrochemical pipes was about 6 million tons in 2014. With the development of chemical equipment, pipe diameter tends to become bigger. The technology update also leads to the wide application of welded pipes, carbon tubes, multiple-unit tubes and iron/plastic/aluminium/stainless steel pipes. New-type coal chemical industry is among the development focus during the 12th Five-Year Plan . By 2015, an investment above 100 billion yuan will be put in pipelines construction in coal chemical industry and all main pipelines will be made of stainless steels.

5. Construction Industry

The total length of drain-pipe used in construction industry is 1 billion meters every year in China. Multiple-unit tubes include aluminium-plastic composite pipes, nonferrous-metal pipes, plastic composite pipes and so on. Steel pipes such as seamless tubes and welded pipes are used in building construction, urban fire protection, building fire protection and gas supply, etc. Steel pipe is not only vessels of industry but also vessels of buildings.

6. Ocean Engineering and Shipping Industry

As per the strategic goal of “Made in China 2025”, China will propel and support key fields like ocean engineering equipment and high technology shipping to make them a breakthrough. The demand for steel tubes in ocean engineering equipment and high technology shipping will be huge and it will have a bright market prospect.