Mysteel: Three Key Questions for H2 2025 Seamless Pipe Market – Policy, Exports, and Cost Dynamics

Market Overview

The first half of 2025 presented significant challenges for China's seamless pipe market, with prices declining 194 RMB/t (4.37%) from January levels. Producer margins compressed dramatically, with billet-rolling mills falling to -50 RMB/t losses. Yet exports emerged as a bright spot, growing 9.27% YoY to 2.93 million tons. As H2 begins with "anti-internalization" policies reshaping coal and steel markets, three critical questions will determine whether July's price bottom holds and how much recovery lies ahead.

Can Policy Dividends Offset Property Weakness?

Infrastructure Support Intensifies

• Transportation investment targets 640B RMB across Zhejiang, Hubei, and Guizhou, boosting mechanical pipe demand

• "Three Oil Giants" maintain high CAPEX: PetroChina (210B), Sinopec (76.7B), CNOOC (130B) upstream investments

• Leading pipe mills report record H1 sales: domestic trade volume ↑19% YoY, premium products ↑6.5%

Property Drag Persists

• Property construction area ↓9.1% YoY (Jan-Jun); new starts ↓20%

• Seamless pipe usage in real estate (3-5% of steel volume) likely drops 5-7% annually

• Offset potential: Urban water network renewal projects (leakage rate ≤9% target) may drive 3% demand growth as seamless pipes replace welded alternatives

Can Export Growth Sustain Amid Trade Barriers?

Regional Strengths

• Middle East (30% share): Oil production increases drive robust OCTG demand

• Southeast Asia: Infrastructure gaps sustain 20-30% price advantage for Chinese pipes

• Export concentration: Top 10 markets comprise 56% of total exports

Trade Barrier Escalation

• Mexico: $1,568.92/ton anti-dumping duties extended for 5 years (Feb 2025)

• Brazil: $778.99–835.47/ton duties on large-diameter pipes (July 2025)

• US tariff policies continue disrupting transshipment routes

Cost Support: Resilient or Vulnerable?

Raw Material Volatility

• July billet prices: Shandong ↑170 RMB/t, Jiangsu ↑110 RMB/t

• Price squeeze: Seamless pipes gained only 92 RMB/t despite higher input costs

• Profit pressure: Shandong mills sustained 4 months of losses; Jiangsu margins well below historical averages

Structural Cost Challenges

• Coke prices fell 50-55 RMB/t in July (4th reduction)

• Iron ore weakness continues as blast furnace production declines

• "Cost bubbles" persist as pipe-billet spreads remain above normal levels

Conclusion: Structured Divergence Ahead

Mechanical and energy pipes will see incremental demand, but cannot fully offset property declines. Exports face headwinds despite H1 growth—June shipments already showed YoY decline. Trade barriers and crude volatility suggest H2 exports may flatline at 2024 levels. With traders prioritizing inventory turnover through price concessions, market dynamics will remain tightly coupled to raw cost movements. The industry's future hinges on premium product development (nuclear/ultra-critical boiler tubes) and carbon-efficient production to counter trade barriers.