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Summary: This week, prices in most markets remained stable, with a few cities seeing an increase. On the macroeconomic front, on September 25, the State-owned Assets Supervision and Administration Commission of the State Council held a forum to discuss the economic performance of some state-owned enterprises, addressing challenges and focusing on stabilizing electricity and coal prices, and preventing "involution-style" vicious competition. Typhoon "Boloy," the 20th of the season, was expected to enter the eastern part of the South China Sea in the early morning of September 27, prompting Sanya maritime authorities to activate a Level III typhoon response. This week, seamless pipe demand showed a north-south divergence, and both mill and social inventories increased, indicating some short-term supply and demand pressure, though the contradiction has not deepened. Looking ahead, with no major pre-holiday stocking happening, market transactions are likely to be stable, and seamless pipe prices are expected to hold steady.
1.1 Price Trends
Seamless Pipe Prices: According to Mysteel's data, as of September 26, the average price of 108*4.5mm seamless pipe across 28 major cities nationwide was 4,298 yuan/ton, a week-on-week increase of 4 yuan/ton. Prices in some markets rose by 10-20 yuan/ton.
Raw Materials: This week, Shandong billet prices remained stable week-on-week, while Jiangsu billet prices dropped by 30 yuan/ton week-on-week.
Pipe Mill Price Adjustments: A survey of 34 sample seamless pipe mills by Mysteel showed that some mainstream mills adjusted their prices with mixed results this week, with adjustments ranging from 20 to 50 yuan/ton.
1.2 Profit Analysis
Seamless pipe mill profits saw a slight increase this week, though overall profitability remains mediocre. The profit for rolling mills using billet from Shandong was -60 yuan/ton, a week-on-week increase of 30 yuan/ton. The profit for rolling mills using billet from Jiangsu was 260 yuan/ton, a week-on-week increase of 40 yuan/ton.
1.3 East China Regional Commentary
In the East China region, prices were relatively stable in all markets except for Shanghai, which saw an increase. Raw material prices showed a slight downward trend, with insufficient momentum for price increases. As the National Day holiday approaches, market transactions are poor, and demand lacks momentum, leading to sluggish sales for merchants. At the same time, seamless pipe social inventory in the East China market saw a small increase this week, and traders' inventories are awaiting digestion. It is expected that seamless pipe prices in the East China region will mainly consolidate 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 682,400 tons this week, a week-on-week increase of 5,200 tons. Sales in the Southern market slowed down due to the typhoon, and the inventory digestion rate for traders decreased, leading to some inventory accumulation.
Mill Inventory: A Mysteel survey of 33 seamless pipe manufacturers nationwide shows that mill inventory was 750,000 tons, a week-on-week increase of 12,800 tons. Raw material inventory was 305,100 tons, a week-on-week increase of 2,200 tons. Seamless pipe mill inventory continued to rise this week, with mills increasing their restocking of low-priced billet. Short-term cost-side risks are relatively manageable.
2.2 Production
This week's output from sample pipe mills was 385,700 tons, a week-on-week increase of 1,500 tons. The capacity utilization rate was 77.35%, a week-on-week increase of 0.3%. The operating rate was 78.22%, remaining flat week-on-week. Some pipe mills are scheduled for maintenance before the National Day holiday, so output is expected to fall from its high level next week, which should ease mill inventory pressure.
2.3 Market Forecast
Price: Black futures closed lower on Friday. Billet prices saw a small decrease, but the cost base has strong support, making a significant drop in billet prices unlikely. Meanwhile, mainstream pipe mills have a low willingness to adjust prices before the holiday.
Fundamentals: Recently, sales in the Southern market have been reduced by typhoon weather. As the heating season approaches in the North, downstream construction projects are rushing to finish, and transactions in the Northern market show signs of improvement. However, the overall domestic seamless pipe demand has not yet returned to peak season levels.
Sentiment: The market is currently in a period of macroeconomic policy "vacuum," leading to general concerns about the future. However, post-holiday "anti-involution" policies may be further implemented, which could lead to a recovery in market sentiment.
In summary, the demand performance in the North and South markets has diverged in the short term. Merchants' enthusiasm for pre-holiday stocking is moderate, and the cost side of seamless pipes has a solid floor. It is expected that domestic seamless pipe prices will remain stable next week.
