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Summary: This week, the average domestic seamless pipe price declined, with consumer markets largely resorting to unofficial price reductions to secure sales. On the macroeconomic front, the Ministry of Finance announced on October 17 that it would continue to pre-allocate the 2026 new local government debt limits. The strongest cold air mass since the second half of the year continues to affect China, bringing rain or snow and noticeable temperature drops to many northern regions. According to the CME FedWatch Tool, the probability of the Federal Reserve cutting interest rates by 25 basis points in October is 96.3%. From a seamless pipe supply and demand perspective, the overall progress of downstream project commencement is less than expected, and market inventory turnover is slow. Seamless pipe prices are mostly expected to operate with volatile weakness next week.
1.1 Price Trends
Seamless Pipe Prices: According to Mysteel data, as of October 17, the average price of 108*4.5mm seamless pipe across 28 major cities nationwide was 4,275 yuan/ton, a week-on-week decrease of 9 yuan/ton. Prices in both Northern and Southern markets generally weakened, with merchants becoming more inclined to use unofficial price reductions to move inventory.
Raw Materials: Billet prices in Shandong and Jiangsu generally trended weak this week, with pipe mills showing low enthusiasm for restocking billet.
Pipe Mill Price Adjustments: A survey of 34 sample seamless pipe mills by Mysteel indicated that most mainstream mills kept their prices stable, with a few individual enterprises reducing prices by 30-50 yuan/ton. Due to cost constraints, overall mill profits are poor, leading to a higher willingness to maintain current prices.
1.2 Profit Analysis
Profit Contraction: Seamless pipe mill profits saw a significant contraction this week. The profit for rolling mills using billet from Shandong was -120 yuan/ton, a week-on-week decrease of 50 yuan/ton. The profit for rolling mills using billet from Jiangsu was 230 yuan/ton, a week-on-week decrease of 50 yuan/ton. Domestic hot-rolled billet prices experienced narrow, volatile adjustments. After the previous cost increase, seamless pipe prices struggled to follow suit, resulting in poor profitability for billet-rolling enterprises.
1.3 East China Regional Commentary
Prices in the East China region generally fell by 10-30 yuan/ton, with 108*4.5mm seamless pipe prices reported at 4,240 yuan/ton in Shanghai and 4,170 yuan/ton in Nanjing. Raw material prices trended narrowly weaker, indicating insufficient momentum for price increases. Post-holiday, the trading atmosphere is generally subdued, and demand lacks momentum. Seamless pipe social inventory in the East China market saw a small decline this week. It is expected that seamless pipe prices in the East China region will continue to consolidate next week.
2.1 Inventory
Social Inventory: According to the latest Mysteel survey of 123 seamless pipe merchants nationwide, social inventory for the sample enterprises was 687,100 tons, a week-on-week decrease of 8,600 tons. As downstream enterprise operations resumed, the inventory that passively increased during the National Day holiday was partially digested this week. Current merchant inventory is slightly lower than last year's level, and traders are prioritizing accelerated inventory turnover as a strategic approach.
Mill Inventory: A Mysteel survey of 33 seamless pipe manufacturers nationwide shows that mill inventory slightly increased this week to 756,400 tons. Raw material inventory was 293,500 tons, a week-on-week increase of 4,700 tons. Although mill inventory for the sample enterprises continued to increase this week in terms of data, it is 38,000 tons lower than the same period last year.
2.2 Production
Output: This week's output from sample pipe mills was 366,700 tons, a week-on-week increase of 4,900 tons. Capacity utilization rate was 73.54%, up 0.98% week-on-week. Operating rate was 70.3%, up 0.99% week-on-week. Some pipe mills have plans to resume production next week, suggesting that mill supply may enter an expansionary phase.
2.3 Market Forecast
Price: Black futures saw mixed gains on Friday, and billet prices experienced a small rebound. However, the market is still primarily focused on trading low-priced resources, and mill price policies are expected to remain stable.
Fundamentals: Recent frequent rainfall in the North China region is affecting shipments, leading to some digestion of traders' prior inventory. Nevertheless, mill resources from monthly agreements are arriving successively, and the short-term supply and demand fundamentals remain under pressure.
Sentiment: Market confidence is currently insufficient. As positive macroeconomic news has not yet materialized, market participants are maintaining a cautious wait-and-see attitude.
In In summary, the domestic seamless pipe market fundamentals remain under pressure in the short term, although the cost base has strong support. It is expected that seamless pipe prices next week will operate with volatile weakness.
