Mysteel Weekly: Mill Inventories Rise, Futures Weak – Seamless Pipe Prices May Stabilize with Weak Bias Next Week (May 6–9)

Overview Post-holiday steel billet and pipe billet prices rose initially but later dipped, with partial market gains offset by slow construction activity due to seasonal rains. Weak futures and rising mill inventories pressured margins. Despite some mills raising prices, national seamless pipe prices edged up just RMB 3/ton by May 9, reflecting muted demand.

Market Snapshot: Prices Edge Higher but Risks Loom

Price Trends:

• National average price for 108*4.5mm seamless pipes rose 3 RMB/ton to 4,335 RMB/ton, with mixed regional adjustments.

• Raw Materials: Shandong pipe billets held steady, while Jiangsu billets fell 40 RMB/ton, widening regional cost disparities.

• Mill Adjustments: Some mills raised prices by 50 RMB/ton, others cut by 30 RMB/ton, reflecting uneven demand.

Profit Squeeze:

• Shandong Mills: Losses deepened to -10 RMB/ton (-20 RMB/ton weekly).

• Jiangsu Mills: Profits dropped to 130 RMB/ton (-30 RMB/ton), pressured by weak sales.

Inventory & Supply: Pressure Builds

• Factory Stocks: Rose to 633,000 tons (+29,500 tons weekly), marking the first increase in five weeks.

• Social Inventories: Inched up in East China (+1,700 tons), though overall levels remain stable.

• Production: Output climbed to 369,800 tons/week (+10,200 tons weekly), pushing capacity utilization to 80.36%.

Regional Focus: East China Stagnates

• Shandong: Pipe billet prices fell 40 RMB/ton, but mill offers stayed flat due to weak downstream orders.

• Jiangsu: Prices held firm in Shanghai, Nanjing, and Hangzhou, though traders reported sluggish post-holiday sales.

• Outlook: Prices likely to drift lower as inventories rise and demand stalls.

Demand Drivers: Seasonal Headwinds

• Weather Woes: Heavy rains in southern China disrupted construction, slowing steel consumption.

• Macro Sentiment: Lack of new stimulus policies has kept buyers cautious, with transactions driven by necessity.

• Export Watch: Global trade barriers (e.g., anti-dumping duties) continue to limit upside for overseas sales.

Next Week’s Forecast: Stability with Downside Risks

Price Drivers

1. Seasonal Headwinds: Southern China’s rainy season slows construction, curbing demand.

2. Weak Futures: Rebar futures remain bearish, limiting upside.

3. Cost Pressures: Stable Shandong billets vs. falling Jiangsu prices create regional disparities.

Sentiment & Strategy

• Traders: Prioritize inventory turnover over restocking.

• Mills: Mixed pricing reflects margin defense amid rising stocks.

Conclusion: Seamless pipe prices are expected to stabilize with a weak bias next week, constrained by seasonal demand dips and inventory pressures.