Mysteel Weekly Report: Increased Market Supply Expected to Stabilize Seamless Pipe Prices Next Week (May 30 - June 6)

Overview: Raw material prices diverged this week, with Shandong billet costs rising and further squeezing profits at billet-processing mills. Mill inventories continued accumulating, while orders for standard and specialty pipes showed divergence. As of June 6, the national seamless pipe average price fell RMB 12/ton week-on-week (WoW).

I. Weekly Review

Price Performance

• Seamless Pipes: National average (108×4.5mm): RMB 4,302/ton as of June 6 WoW change: ↓ RMB 12/ton (Declines in major markets)

• Raw Materials (Billet): Shandong billet: ↑ RMB 50/ton WoW Jiangsu billet: ↓ RMB 40/ton WoW

• Mill Price Adjustments: 34 sampled mills cut ex-factory prices by RMB 20-70/ton.

Profitability Analysis

• Shandong Mills: Average profit: RMB -120/ton (↓ RMB 70/ton WoW)

• Jiangsu Mills: Average profit: RMB 70/ton (↓ RMB 30/ton WoW)

East China Regional Report

• Market Prices: Shanghai: ↓ RMB 30/ton WoW Nanjing: Unchanged WoW Hangzhou: ↓ RMB 60/ton WoW

• Market Drivers: Weak billet prices and sluggish off-season transactions forced mills to widen price cuts.

• Inventory: Social inventories ↑ 5,400 tons WoW (Sustained accumulation).

• Outlook: Prices expected to remain weak with narrow fluctuations.

II. Next Week Forecast

Inventory Analysis

• Social Inventory (123 traders): 703,100 tons (↓ 5,900 tons WoW)

• Mill Inventory (33 producers): 657,100 tons (↑ 26,400 tons WoW; ↑ 53,600 tons vs May)

• Raw Material Inventory (Mills): 305,700 tons (↑ 14,000 tons WoW; ↑ 8,300 tons vs May)

Supply Analysis

• Production: 370,800 tons (↑ 7,500 tons WoW)

• Capacity Utilization: 80.57% (↑ 1.63% WoW)

• Operating Rate: 59.09% (↓ 0.91% WoW)

• Key Observations: Standard pipe orders face pressure while specialty pipes maintain full schedules. State-owned mills show strong price support willingness. Rising inventories may trigger maintenance shutdowns.

Market Prediction

• Price Drivers: Stronger black futures and Shandong billet hikes increased costs, but downstream resistance limited price rebounds.

• Fundamentals: Social inventories rebounded, mill stocks remained high, and demand lacked sustainability.

• Market Sentiment: Southern rains and off-season caution strengthened bearish trader expectations.

• Forecast Conclusion: National seamless pipe prices expected to fluctuate within narrow range next week.