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In April, the Chinese seamless pipe market operated within a narrow consolidation range. While raw material costs remained firm, manufacturer profit margins were significantly squeezed, leading to a cautious "wait-and-see" sentiment among global traders. As we transition into May, the market is characterized by a "weak supply and demand" structure. However, with improving weather conditions in China, a short-term recovery in downstream activity is expected. For international buyers, May presents a critical window where prices are projected to rise initially due to cost-push factors before facing a correction as they hit the "demand ceiling."
Price Stabilization: By the end of April, the average domestic price for seamless pipes (20#, 108*4.5mm) stood at 4266 RMB/ton, a marginal monthly decrease of only 0.04%. Despite the global volatility, the year-on-year decline of 1.52% indicates that prices have found a strong support level.
Margin Squeeze at the Mill: High raw material costs have not been fully passed down to finished products. Shandong-based mills saw theoretical profits drop to -110 RMB/ton, a monthly decrease of 60 RMB/ton.
Customer Benefit: With tube blank prices rising to 3440-3580 RMB/ton, the price floor for seamless pipes is exceptionally rigid. Global purchasers should recognize that mills are unlikely to offer further discounts as they are already operating at a loss.
High Output Persistence: Weekly production in late April remained high at 41.94 million tons, with a capacity utilization rate of 84.11%. However, the operating rate has begun to trend downward, settling at 79.21%.
Inventory Equilibrium: Factory stocks reached 76.64 million tons, showing a delicate balance between production and orders. As mill profits remain low, we anticipate a reduction in production volume during May.
Customer Benefit: A drop in production typically leads to tighter lead times. Securing orders in the first half of May is advisable to avoid potential delays caused by mill maintenance and reduced shifts.
Domestic Consumption Growth: Daily trading volumes among sample enterprises rose by 1.99% year-on-year to 15,900 tons. While the "rainy season" in parts of China slowed some projects, the clearing weather in May will likely spark a short-term demand rebound.
Export Market Pressure: March export data showed a significant monthly decline of 13.85% to 45.73 million tons, largely due to the exhaustion of early-year "rush" orders and geopolitical tensions in the Middle East. However, cumulative Q1 exports still show a 2.52% year-on-year growth.
Strategic Insight: Despite short-term fluctuations, the global reliance on Chinese high-quality seamless pipes remains high. Buyers should watch for a potential easing of shipping costs and Middle Eastern logistics bottlenecks toward late May.
The seamless pipe market in May is expected to follow a "Rise-then-Fall" trajectory. In the short term, firm raw material costs and a post-rainy-season demand recovery will push prices upward. However, the market faces a clear "demand ceiling," and high-level inventory consumption may slow in the latter half of the month.
Supply: Likely to decline as mills cut production to curb losses.
Demand: Short-term recovery followed by a moderate correction.
Cost: Support remains "rigid" due to high energy and raw material expenses.
For global stakeholders, the first two weeks of May represent the most active period for price adjustments. Proactive procurement before the mid-month correction is recommended for those looking to secure high-spec materials amidst tightening supply.
