Mysteel Monthly: Seamless Pipe Prices May See First Decline Then Rise in September

Market Overview

August saw marginal price gains for seamless pipes amid significantly compressed mill profits and narrow raw material fluctuations. Elevated mill inventories created supply pressure, forcing producers to offer discounts to secure orders. Overall, market fundamentals remained under strain. As September progresses with the traditional peak season, conditions are expected to gradually improve, potentially driving a price recovery in the latter half of the month.

Price & Profit Performance

Modest Price Increases

• August average: 4,343 RMB/ton (↑3 RMB/t MoM, +0.07%)

• Gains narrowed significantly compared to July's increase

• Prices showed strength but momentum weakened

Severe Profit Compression

• Shandong mills: -70 RMB/t (↓180 RMB/t MoM)

• Blast furnace mills: 88 RMB/t (↓101 RMB/t MoM)

• High raw material costs severely squeezed margins

Raw Material Divergence

• Shandong billet: 3,380 RMB/t (↑10 RMB/t MoM)

• Jiangsu billet: 3,460 RMB/t (↓20 RMB/t MoM)

• Mills showed limited purchasing enthusiasm due to high costs

Supply Dynamics

Production Recovery

• Weekly output: 382.8k tons (↑6k tons MoM)

• Capacity utilization: 76.77% (↑0.94% MoM)

• Operating rate: 73.27% (↓1.48% MoM)

• September outlook: Environmental restrictions may reduce northern production

Inventory Pressure

• Mill inventories: 752.1k tons (↑13.7k tons MoM)

• Raw material stocks: 286.4k tons (↓1.8k tons MoM)

• Trader caution limited restocking, increasing mill pressure

• Expected relief from northern production cuts in September

Demand Situation

Domestic Transactions

• August daily average: 14,642 tons (↓88 tons MoM)

• Weather impacts: High temperatures and rainfall affected construction

• September improvement: Cooling weather expected to boost site activity

Export Challenges

• Jan-July exports: 3.3947M tons (↑9.62% YoY)

• July exports: 462.4k tons (↓1.97% MoM)

• Uncertainty: Tariff policies contributed to export decline

September Market Outlook

Supply Side

• Poor profits driving production cuts in northern mills

• Inventory pressure expected to ease with demand recovery

Demand Side

• Seasonal improvement in construction activity

• Expected outperformance versus August levels

Cost Support

• High molten iron production supporting raw material prices

• Coking coal and ore prices showing resilience

Price Trajectory

• Short-term pressure from weak fundamentals

• Gradual recovery expected mid-late September

• Cost support enabling restorative price increases

• Overall pattern: Initial decline followed by late-month recovery