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As the market enters June, the seamless steel pipe sector is facing the twin pressures of a traditional off-season and intensified operational limitations. With construction sites slowing down due to the upcoming national exams (Gaokao) and persistent rainy weather in Southern China, downstream demand remains tepid. While raw material prices have stabilized, the lack of robust demand is causing factory and social inventories to creep upward. For international procurement managers, the market is currently exhibiting a "wait-and-see" sentiment, with prices trending toward a weak consolidation as distributors prioritize liquidity over margin.
Price Stability: As of June 5, the national average for 108*4.5mm seamless pipes stood at 4,328 RMB/ton, essentially flat with a marginal weekly gain of 1 RMB/ton.
Cost Foundation: Raw material tube blank prices in Shandong and Jiangsu have remained stable, providing a temporary but fragile price floor. The North-South price gap remains at 200 RMB/ton.
Profitability: Secondary rolling mills are seeing mixed results. Shandong mills reported a profit of 110 RMB/ton (up 20 RMB/ton), while Jiangsu mills saw profits dip to 70 RMB/ton (down 10 RMB/ton).
Inventory and Output:
Social Inventory: Increased to 711,700 tons (up 2,600 tons), reflecting slow turnover in the distribution chain.
Factory Inventory: Jumped to 783,700 tons (a weekly increase of 13,300 tons), signaling that supply is struggling to clear into the market.
Output: Weekly production decreased slightly to 407,400 tons (down 3,700 tons), with capacity utilization at 81.69%.
We anticipate that seamless pipe prices will trend toward a "weak consolidation" in the coming week. The rationale is centered on the following:
Demand Ceiling: June’s traditional off-season status is compounded by localized construction bans (related to academic exams and seasonal rains), effectively capping short-term demand.
Inventory Buildup: Traders are increasingly risk-averse, focusing on "volume-for-liquidity" to clear existing stock. With inventory at social warehouses rising and factory stockpiles also climbing, there is little upward momentum for pricing.
Market Sentiment: Futures market volatility and the lack of strong macro-policy stimulus have led to a cautious approach among participants. Most market players are limiting their replenishment activities, keeping a "lean" approach to inventory until a clearer demand signal emerges.
The market is currently in a state of delicate balance. While prices are not crashing, the lack of demand drivers makes further gains highly unlikely in the short term.
Procurement Strategy: We recommend a "small-batch, high-frequency" procurement strategy. Avoid heavy, long-term inventory accumulation for the next 2-3 weeks.
Monitoring: Keep a close eye on factory inventory levels. If factory stockpiles continue to rise, mills may be forced to offer more aggressive competitive pricing in late June to clear balance sheets for the mid-year mark.
Negotiation Focus: Leverage the high social inventory levels among traders to negotiate better payment terms, as many distributors are currently prioritizing cash-flow stability.
