The main production costs of precision seamless steel pipes

The production cost structure of precision seamless steel pipes is more complex than that of ordinary seamless pipes due to the additional finishing processes involved. United Steel Industry Co., Ltd. has outlined the main components contributing to the production costs of precision seamless steel pipes.

1. Raw Material Costs

Billet Costs:
This is the largest cost component. Precision seamless steel pipes are typically processed from hot-rolled seamless pipes. Therefore, the quality and price of the billets directly influence the final product's cost. Billet prices are affected by the steel market, the type of steel (carbon steel, alloy steel, stainless steel), and billet specifications.

Alloy Elements (if using alloy steel):
For alloy precision seamless pipes, elements like chromium, nickel, and molybdenum are added. Fluctuations in the prices of these alloy elements can also impact production costs.

2. Equipment Depreciation and Maintenance Costs

Production of precision seamless steel pipes requires high-precision equipment, such as cold drawing machines, cold rolling mills, finishing mills, and heat treatment furnaces. The investment in these machines is substantial, resulting in high depreciation costs. Daily maintenance and upkeep of the equipment also contribute to the overall cost.

3. Labor Costs

Skilled labor is required for the production of precision seamless steel pipes, including operators and quality inspectors, making labor costs a significant part of the overall production expenses.

4. Energy Costs

A significant amount of energy is consumed in the production process, which includes costs for electricity, natural gas, water, and other utilities.

5. Environmental Costs

With increasing environmental regulations, companies must invest in environmental management systems, such as waste gas treatment, wastewater treatment, and solid waste management, all of which add to the cost.

6. Managing Costs

The costs of business operations management, administrative management, financial management, and other overhead expenses are also included in the product’s total cost structure.

7. Quality Control Costs

To maintain high product quality, a comprehensive quality management system and strict quality control processes are necessary, which come with additional costs.

8. Production and Processing Costs

Hot Rolling/Cold Rolling Costs (Billet Manufacturing):
If the tube billet is produced in-house, hot rolling or cold rolling costs must be considered, which include energy consumption, equipment depreciation, labor costs, and cutting operations.

Cold Drawing/Cold Rolling/Finishing Rolling Costs (Finishing Costs):
These are unique costs associated with the production process of precision seamless steel pipes.

Cold Drawing: Includes drawing force, die wear, lubricant consumption, and the number of drawing passes.

Cold Rolling: Covers rolling force, roll wear, lubricant and coolant consumption, rolling passes, and any intermediate annealing.

Finish Rolling: Involves precision rolling mills, high-precision die maintenance, and strict process control. This cost is generally higher than cold drawing or cold rolling due to the need for more precise equipment and controls.

Heat Treatment Costs:
Heat treatment processes such as annealing and normalizing are often necessary to relieve internal stresses from cold working. These processes involve energy consumption in heating furnaces, as well as holding time and cooling methods.

Surface Treatment Costs:
Depending on customer specifications, surface treatments such as pickling, phosphating, polishing, and honing may be required, adding to the overall cost.

Inspection and Testing Costs:
To ensure the quality of precision seamless pipes, size, mechanical properties, and surface quality must be thoroughly tested. Costs for non-destructive testing (e.g., ultrasonic testing, eddy current testing) and destructive testing (e.g., tensile testing, hardness testing) are included.

Mold and Tool Costs:
Cold drawing, cold rolling, and finish rolling require the use of various molds and tools. The costs of manufacturing, maintenance, and replacement of these tools are also significant.

Lubrication and Cooling Costs:
A large quantity of lubricants and coolants is used during the cold processing stages to reduce friction and manage temperatures, adding to the total production cost.

These components collectively contribute to the overall cost structure of precision seamless steel pipe production. The complexity of the processes involved and the high standards required for quality control result in a more expensive production cycle compared to ordinary seamless pipes.