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Pipe exporters should be cautious in selling products especially those for oil-exploration use to risky markets and to Iran in light of its nuclear development plans in particular.
“We should know that geopolitical risk will be a dominating risk in the global economy and trading this year, and for pipe exports, Iran is the No.1 risky region due to the nuclear issue,” Li Qiang, director of CSPA, said.
Knowing this will help Chinese mills avoid getting hurt by political turmoil, Li said.
Apart from direct trading, transit trading via third-parties should also be prevented, in case of facing sanctions from western countries including the USA, he added.
China’s seamless pipe exports to Iran peaked at 2.18 million tonnes in 2012, up 65.8% from 2011.
The volume fell to 1.18 million tonnes in 2013, due to tensions in the Middle East region and consequently a slump in oil production, which resulted in a decline in pipe demand.
However, Iran’s seamless pipe imports from China rebounded by 62% last year to 1.92 million tonnes, which made it the second-largest buyer of this product, according to Chinese customs data.
“We know the risks, but we have no choice as we need to survive first. The Middle East is a traditional major consumer for steel pipes,” a Hebei-based pipemaker told Steel First.
The only thing that mills exporting to geopolitically-risky regions could do at the moment is to strengthen export credit insurance, he added.
Meanwhile, a manager with a Tianjin-based pipe mill said that his mill has already transferred its focus to Southeast Asia and North Africa. “As a small company, we cannot afford any risks. We’d rather do business at a slower but safe pace,” he said.
Chinese pipemakers must be aware of the risks of exporting to politically-sensitive regions including Iran, the China Steel Pipe Association (CSPA) warned at its members' conference last weekend.