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China's steel pipe market faces intensified cost pressures and narrowed profit margins. The traditional off-season in June-July revealed weaker-than-expected demand and excessive supply elasticity, creating pronounced oversupply conditions. Prices demonstrated an "easier to fall than rise" pattern, dampening trader confidence. As the peak season approaches, the market's trajectory hinges on balancing cost constraints with policy stimulus effectiveness.
Persistent Cost Pressure
Shandong billet (20#: Φ50): 3,280 RMB/ton (↑110 RMB/t YoY)
Jiangsu billet (20#: Φ50): 3,480 RMB/ton (↑140 RMB/t YoY)
Tangshan hot-rolled strip (2.5*355*C): 3,270 RMB/ton (↑130 RMB/t YoY)
Profit Erosion Despite Cost Gains
National welded pipe social inventory: 1.3646M tons (↓1.47% WoW, ↓1.94% MoM)
High inventory levels continue squeezing mill margins
Terminal demand remains weak with low construction activity
Price Performance Divergence
Welded pipe (4"*3.75mm): 3,679 RMB/t (↑5 RMB/t MoM, ↑66 RMB/t YoY)
Galvanized pipe: 4,289 RMB/t (↑24 RMB/t MoM, ↑80 RMB/t YoY)
Seamless pipe (108*4.5): 4,333 RMB/t (↑3 RMB/t MoM, ↓133 RMB/t YoY)
Trader Adaptation Strategies
Maintaining stable prices during increases, immediately matching declines
Reducing inventory levels by 50-67% compared to 2024
Some traders transitioning away from spot inventory due to risk concerns
Real Estate Policy Support
Property stimulus measures gaining traction with Shanghai easing purchase restrictions
New home sales showing positive momentum with improved property quality and supply rhythm
Secondary market activity expected to rise with lowered purchase thresholds
Infrastructure Investment
National fixed asset investment (ex-property): ↑5.3% Jan-Jul
Traditional "Golden September" peak season approaching with anticipated demand recovery
Trader Inventory Management
Logistics efficiency enabling rapid delivery (same-day for nearby markets, 3 days for remote areas)
Most traders maintaining low-to-medium inventory levels to mitigate risk
Cost Volatility Management
Monitor iron ore and coke price fluctuations impacting production costs
Implement flexible pricing mechanisms and hedge using futures tools
Policy Implementation Efficiency
Track real estate stimulus measure implementation and funding availability
Assess actual demand release intensity from infrastructure projects
Regional Market Differentiation
Consider logistics costs and profit margins in cross-regional sales
Adapt strategies to local market conditions and price variations
Supply-Demand Balance
Watch capacity adjustments and inventory data closely
Focus on demand changes in construction, manufacturing, and infrastructure
Domestic Economic Resilience
July policies showing effectiveness despite external challenges
Government focusing on stabilizing employment, enterprises, and market expectations
Urban development quality initiatives supporting long-term demand
International Challenges
Global economy showing "resilience while slowing" with intensified divergence
US tariff policies impacting cross-border logistics (50% rates on 407 steel product categories)
Geopolitical conflicts and debt pressures creating downward risks
China's Stabilizing Role
Maintaining proactive approach to inject stability into global markets
Continued economic stability despite external complexities
