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Overview:
This week saw the average domestic seamless pipe price decline by 7 yuan/ton, while raw material prices showed a strengthening trend. From a supply and demand perspective, the seamless pipe supply-side pressure eased slightly this week, yet the weak market demand structure has not fundamentally changed, keeping short-term seamless pipe prices under pressure. On the macroeconomic front, the upcoming new round of Sino-US economic and trade consultations, coupled with the Ministry of Finance’s plan to issue U.S. dollar sovereign bonds, will be key focal points for the market next week.
Seamless Pipe Prices Showed Weak Decline
According to Mysteel data, as of October 31, the average price of 108*4.5mm seamless pipe across 28 major cities nationwide was 4,254 yuan/ton, reflecting a week-on-week decrease of 7 yuan/ton.
Raw Material and Mill Price Adjustments Diverged
This week, billet prices in both Shandong and Jiangsu trended slightly stronger, with overall fluctuations ranging from 20 to 30 yuan/ton.
A survey of 34 sample seamless pipe mills indicated that most mainstream mills raised their prices this week, with increases ranging from 20 to 30 yuan/ton.
Entering the fourth week after the National Day holiday, influenced by perceived macroeconomic policy benefits and the rise in billet raw material prices, mill quotes experienced minor upward testing.
Profitability Saw Minor Improvement
Seamless pipe mill profits showed a small increase this week. The profit for rolling mills using billet from Shandong remained flat at -80 yuan/ton, while the profit for rolling mills using billet from Jiangsu increased by 10 yuan/ton to 220 yuan/ton.
Although the previous fall in Shandong billet prices offered a slight repair to mill profits, most domestic mills are still focused on offering price concessions to push shipments. Profitability remains poor, reflecting clear short-term cost-side constraints.
East China Regional Price Commentary
This week, hot-rolled billet prices in Shandong and Jiangsu rose by 30 yuan/ton and 20 yuan/ton, respectively, compared to last Friday. Shandong's mainstream seamless pipe ex-factory prices adjusted up by 20-50 yuan/ton.
However, mainstream seamless pipe market prices in the East China region trended weaker, with Shanghai and Nanjing markets falling by 20 yuan/ton compared to last Friday, while Hangzhou rose by 10 yuan/ton.
The market trading atmosphere was weak, and despite the strengthening raw material prices, upward price momentum was insufficient. Due to subdued terminal demand and reliance on as-needed purchasing, overall transactions were poor.
Seamless pipe social inventory in the East China market saw a slight increase this week, and prices in the region are expected to continue operating with a stable-to-weak bias next week.
Inventory Reduction Continued, But Mill Inventory Rose
According to Mysteel's latest survey of 123 seamless pipe merchants nationwide, social inventory for the sample enterprises was 678,200 tons, a week-on-week decrease of 7,300 tons.
Inventory destocking continued this week, with the Southern market destocking clearly faster than the North, where rapidly falling temperatures are leading to noticeable demand contraction. Merchants are expected to actively push shipments next week, which may lead to a further decline in market inventory.
Conversely, mill in-house inventory for 33 sample producers rose by 12,700 tons week-on-week to 760,500 tons, due to the resumption of production at some Central China mills. Raw material inventory fell by 8,400 tons to 283,000 tons.
Mill inventory pressure persists, especially with rapidly decreasing temperatures in the North.
Production Saw Minor Increase
Weekly output from sample pipe mills was 366,500 tons, a week-on-week increase of 2,300 tons. Capacity utilization rate rose by 0.46% to 73.5%, and the operating rate fell by 0.99% to 71.29%.
Incomplete statistics suggest that two Northern pipe mills will conclude their maintenance next week, indicating a potential increase in output and operating rates for mainstream pipe mills.
Market Prediction: Persistent Weakness
The futures market continued its narrow, volatile pattern this week, with no significant positive policies emerging after the Sino-US economic and trade consultations.
Supply and demand pressure persists in the seamless pipe market. Influenced by off-peak season demand expectations, traders are focused on pushing shipments, and inventory replenishment remains cautious. Although mill output saw an increase this week, overall order pressure has not been alleviated.
Looking ahead, Northern merchants will continue to reduce inventory to cope with demand contraction due to colder weather, with the market maintaining an active sales focus. The upcoming conclusion of some mill maintenance plans suggests continued internal inventory pressure.
In summary, the short-term fundamentals of the domestic seamless pipe market show no change to the current pressure. Merchant sentiment towards the future market remains cautious, and prices are expected to continue a weakly volatile trend next week.
