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Summary: This week saw a partial decline in seamless pipe market prices, with a few cities experiencing increases. Post-holiday domestic demand for seamless pipe was released but generally fell short of expectations. Simultaneously, both mill and social inventories surged, increasing market supply pressure. The short-term supply and demand dynamics are under strain, with many merchants resorting to unofficial price reductions to secure sales. Looking ahead, in the absence of significant positive news, national seamless pipe prices are expected to mainly stabilize with a tendency to weaken.
1.1 Price Trends
Seamless Pipe Prices: According to Mysteel data, as of October 11, the average price of 108*4.5mm seamless pipe across 28 major cities nationwide was 4,284 yuan/ton, a week-on-week decrease of 14 yuan/ton. The majority of markets experienced price drops this week.
Raw Materials: Billet prices in Shandong and Jiangsu diverged this week: Shandong prices fell by 10 yuan/ton week-on-week, while Jiangsu prices rose by 10 yuan/ton week-on-week.
Pipe Mill Price Adjustments: A survey of 34 sample seamless pipe mills by Mysteel showed that most mills kept their prices stable this week, with only a few adjusting their posted prices.
1.2 Profit Analysis
Seamless pipe mill profits showed mixed performance across regions. The profit for rolling mills using billet from Shandong was -70 yuan/ton, a week-on-week decrease of 10 yuan/ton. The profit for rolling mills using billet from Jiangsu was 280 yuan/ton, a week-on-week increase of 10 yuan/ton. The narrowing fluctuation range of billet prices makes it difficult for seamless pipe prices to significantly rise or fall, leading to narrow profit volatility for pipe mills recently.
1.3 East China Regional Commentary
Mainstream seamless pipe market prices in the East China region declined, with Shanghai market prices dropping by 20 yuan/ton and Hangzhou market prices falling by 60 yuan/ton. Transaction volumes in the East China market fell short of expectations, and merchants commonly resorted to unofficial price cuts to move inventory. Social inventory for seamless pipe in the East China market increased, indicating a rise in supply pressure. It is expected that seamless pipe prices in the East China region will continue to operate under weak volatility next week.
2.1 Inventory
Social Inventory: According to a Mysteel survey of 123 seamless pipe merchants nationwide, the national seamless pipe social inventory was 695,700 tons this week, a week-on-week increase of 8,500 tons. Social inventory saw a noticeable increase due to concentrated market arrivals during the National Day holiday.
Mill Inventory: A Mysteel survey of 33 seamless pipe manufacturers nationwide showed that mill inventory was 756,100 tons, a week-on-week increase of 4,400 tons. Raw material inventory was 288,800 tons, a week-on-week decrease of 13,800 tons. Mill inventory continued to increase this week, and after digesting prior orders, mainstream pipe mills are starting to feel order pressure.
2.2 Production
This week's output from sample pipe mills was 361,800 tons, a week-on-week decrease of 13,700 tons. The capacity utilization rate was 72.56%, a week-on-week decrease of 2.75%. The operating rate was 69.31%, a week-on-week decrease of 1.98%. Mill profits have been noticeably squeezed by costs, and demand growth is limited, leading some mills to undergo maintenance and reduce production, resulting in output falling from its previous high level.
2.3 Market Forecast
Price: Black futures saw narrow volatility this week, and billet prices also fluctuated narrowly. Although cost-side support remains relatively strong in the short term, pipe mills may issue further preferential policies due to increasing order pressure.
Fundamentals: High temperatures persist in the South, while the North is experiencing increased rainfall, significantly impacting downstream project commencement and leading to weak market transactions.
Sentiment: There is widespread concern about the market outlook. As the "anti-involution" policy has not yet introduced concrete measures, merchant wait-and-see sentiment has intensified.
In summary, the domestic seamless pipe market faces increased inventory pressure after the holiday, coupled with order pressure on pipe mills. It is expected that domestic seamless pipe prices will stabilize with a tendency to weaken next week.
