Mysteel: Market Fluctuations Intensify Supply-Demand Game in Pipe Sector

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Overview As China transitions from Grain in Ear to Autumn Commences, temperatures soar nationwide with increased rainfall. Southern regions enter the plum rain season while northern areas harvest wheat and plant rice. Post-Grain in Ear, traditional off-season characteristics intensify: steel demand underperforms, excessive supply elasticity creates pronounced oversupply, and prices exhibit a "downward bias." Having undergone significant adjustments, can pipe prices rebound strongly in July? Will sales improve? Analysis below covers key aspects.

1. Prices: Downward Pressure Dominates

Data as of June 17, 2025

Welded Pipe (4"*3.75mm): ¥3,492/ton (↓¥102 MoM; ↓¥541 YoY)
Galvanized Pipe (4"*3.75mm): ¥4,074/ton (↓¥150 MoM; ↓¥580 YoY)
Seamless Pipe (Φ108*4.5mm): ¥4,277/ton (↓¥64 MoM; ↓¥521 YoY)

Key Observations:

Galvanized pipes saw steepest declines (-3.6% MoM)
Welded pipe production rose slightly amid inventory buildup
Futures showed temporary gains but failed to sustain momentum
Site delays due to rains forced traders to prioritize destocking
Price inversion (selling below cost) occurred among some traders

2. Demand Outlook: Cautious Hope for H2

Transaction Slump

Weekly welded pipe sales: 14,337 tons/day

Infrastructure & Property Signals

Jan-May property investment: 3.6234 trillion yuan (-10.7% YoY)
Construction area: 6.2502 billion m² (-9.2% YoY)
H2 Project Focus: Public facilities, transport, utilities, water/environmental engineering.

Policy Support

Multi-ministerial policies (Finance, Housing, Financial Bureau) aim to stabilize property.
Bank rate cuts + government growth targets create favorable macro backdrop.
Critical Window: Demand recovery likely by September if policies materialize.

3. Trader Strategies: Risk Aversion Dominates

Inventories kept low-to-mid level during off-season.
Faster logistics enable same-day/3-day deliveries, reducing stock needs.
Galvanized pipe traders report 30%+ order reductions in May amid weak demand.
Priority: Inventory reduction over speculation.
High warehousing costs force continued caution until demand rebounds.

4. Market Forecast: Stable-Weak Prices, Limited Demand Growth

Short-Term Reality

Steel prices remain depressed with fierce competition.
Coking coal/coke/iron ore at lows, but trader costs stay high.
Mills maintain output without policy-driven cuts.

Strategic Advice

"While markets stagnate, consider stepping back: Recharge with family, network with peers, or refine strategies. Avoid speculative stocking. Prioritize risk control with ‘fast-in-fast-out’ tactics."