Mysteel Weekly: Passive Inventory Build-up Points to Continued Price Softness for Seamless Pipes

Market Overview

Prices declined across most markets this week, with transactions dominated by low-price deals. Shandong mills led the downturn with 30-60 RMB/ton price cuts, reflecting widespread profit concessions. Billet costs weakened further, prompting mills to prioritize low-cost raw material purchases. While mill inventories dropped 13k tons, social stocks rose 0.5k tons due to sluggish demand. With supply-demand fundamentals remaining weak and seasonal demand recovery delayed, seamless pipe prices are poised for continued softness in the coming week.

Key Market Dynamics

1. Price & Cost Pressures

• National Average: 4,318 RMB/ton (↓25 RMB/t WoW), marking significant weekly decline

• Regional Performance: North China: ↓20-30 RMB/t WoW

• Raw Material Easing: Shandong billets: ↓30 RMB/t WoW；Jiangsu billets: ↓30 RMB/t WoW

• Mill Pricing Strategy: Selective cuts (30-60 RMB/t) concentrated in Shandong producers

2. Profit Divergence Intensifies

• Shandong: -60 RMB/t (↓20 RMB/t WoW) – losses deepen

• Jiangsu: 220 RMB/t (↑10 RMB/t WoW) – marginal improvement

• Structural Challenge: High-cost inventory impedes cost transfer to downstream buyers

3. Inventory Imbalance Worsens

• Social Stocks: 686.5k tons (↑0.5k tons WoW) – passive build-up amid slow sales

• Mill Stocks: 739.1k tons (↓13k tons WoW) – production discipline emerging

• Key Insight: Social inventory growth reflects demand weakness, not speculative stocking

4. Supply Adjustment Underway

• Output: 361.3k tons (↓21.5k tons WoW)—notable reduction

• Operational Rates: Capacity utilization: 72.46% (↓4.32% WoW); Operating rate: 73.27% (stable WoW)

• Production Outlook: Northern may boost output next week

Regional Spotlight: East China

• Prices fell 50-70 RMB/t following billet cost declines

• Traditional peak season demand failed to materialize

• Traders prioritized destocking, offering hidden discounts

• Outlook: Continued weakness with limited near-term catalysts

Next Week Outlook

• Price Trajectory: Continued softness (4,290–4,320 RMB/t range)

• Support Factors: Production Discipline: Mills maintaining output control;Cost Floor: Billet prices showing tentative stability

• Downside Risks: Seasonal demand recovery delayed；Mill inventory overhang may trigger further discounts

• Key Watchpoint: Post-environmental control production rebound intensity