Wales found themselves in a tough group on day one where they found themselves paired with Fiji and Argentina along with Mexico.
They opened the tournament with a 35-14 defeat to Fiji who gained revenge for the loss they suffered in Wellington seven days earlier.
Fiji built on a 21-7 halftime lead with newcomer Tuwai crossing for two tries early in the second half to take them clear.
With Wales fielding a considerably different side to the one which beat both Fiji and New Zealand at the Westpac Stadium, Phil John's side struggled against the consistent Argentina side who swept to a four tries to one victory to record a 20-5 success.
Wales managed to regain their poise in their final pool game against minnows Mexico to win 57-0. Lee Beach, Rhodri McAtee and Chris Davies all grabbing braces.
Finishing behind Fiji and Argentina meant Wales went into the Bowl for day two where they faced Japan in the quarter-finals.
Wales outscored Japan by four tries to two to beat them 28-12 and reach the Bowl semi final against Australia.
The Aussies got off to a flier before a late flurry of tries by Wales saw them score three tries in the dying minutes to come within two points but Australia held out for a 26-24 victory.
Australia raced over for four tries before Wales mounted a late rally through Rhys Webb who sped over for two tries and Tal Selley.