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Overview: This week, prices in most markets showed a slight downward trend, with some cities remaining stable. Key production hubs saw small price increases due to rising raw material costs. With the anticipation of new macroeconomic policies settling, the market has recently been focused on actual transaction volumes. The prevailing trend is a preference for low-priced resources. Looking ahead to next week, the last week before the National Day holiday, there may be a temporary push for construction and inventory stocking, which could lead to some market fluctuations.
Pricing:
Seamless Pipe Prices: According to Mysteel data, as of September 19, the average price for 108*4.5mm seamless pipe across 28 major cities in China was 4,324 yuan/ton, a week-on-week decrease of 11 yuan/ton. This week, prices in major production and distribution areas saw a small increase, while some other markets experienced minor drops of 10-30 yuan/ton.
Raw Materials: This week, the price of Shandong pipe billet increased by 50 yuan/ton week-on-week, while Jiangsu pipe billet prices decreased by 20 yuan/ton week-on-week.
Pipe Mill Price Adjustments: Based on a Mysteel survey of 34 sample seamless pipe mills, a few mills lowered their prices to stimulate sales this week, but the majority kept their price policies stable.
Profitability:
Seamless pipe mills showed mixed profitability this week. Shandong's tolling mills had a profit of -30 yuan/ton, a week-on-week decrease of 20 yuan/ton. Jiangsu's tolling mills had a profit of 220 yuan/ton, a week-on-week decrease of 20 yuan/ton. Overall, the profitability of some mills declined slightly this week.
Regional Commentary:
East China: In the East China seamless pipe market, the prices for Shandong and Jiangsu hot-rolled pipe billets increased by 10-30 yuan/ton week-on-week. The ex-factory prices for seamless pipes from major mills in Shandong showed mixed movements, but most remained stable. Prices in key markets in East China, such as Shanghai, Nanjing, and Hangzhou, were also stable week-on-week. While raw material prices for pipe billets saw a narrow upward trend this week, the momentum was relatively weak. Since the beginning of September, the traditional peak season has shown weak characteristics. Demand has improved but not significantly, and merchants are struggling to move their products. This week, the social inventory of seamless pipes in the East China market decreased slightly, as merchants managed their inventory risks appropriately. Prices in the East China region are expected to continue to fluctuate weakly next week.
Inventory:
Based on Mysteel's survey of seamless pipe merchants across the country (123 companies), the national social inventory this week was 692,800 tons, a week-on-week increase of 6,300 tons. This week saw a concentrated arrival of resources from steel mills, and the downstream end-users' ability to absorb this inventory was limited, leading to a noticeable increase in social inventory. Recently, demand in the Northwest and Northeast regions has been the first to recover, and shipments from the north have improved. It is expected that the national social inventory of seamless pipes may decrease next week.
According to Mysteel's survey of seamless pipe producers (33 companies), mill inventory was 737,200 tons, a week-on-week decrease of 6,300 tons and a month-on-month decrease of 13,200 tons. Raw material inventory was 302,900 tons, a week-on-week increase of 1,800 tons and a month-on-month increase of 13,700 tons. This week, mill inventory showed a slight decrease. Construction projects are increasing in the northern regions, so while mills still face some pressure with new orders, the overall situation is better than before.
Production:
A survey of weekly production at national seamless pipe mills (30 production companies, 101 production lines) showed that this week's output was 384,200 tons, a week-on-week increase of 9,500 tons and a month-on-month decrease of 6,100 tons. The capacity utilization rate was 77.05%, a week-on-week increase of 1.91% and a month-on-month decrease of 1.5%. The operating rate was 78.22%, a week-on-week increase of 1.98% and a month-on-month decrease of 0.57%. This week's output saw a small increase as some enterprises resumed production.
Market Outlook:
From a pricing perspective, prices in major consumer cities across the country remained stable with a slight downward bias, still suppressed by demand. Prices in major production cities saw small increases, while pipe billet prices showed mixed movements. Shandong pipe billet prices have strong support in the 3,200-3,250 yuan/ton range. The overall price volatility for seamless pipes remains small, fluctuating with raw material costs.
From a fundamental perspective, in the second week of September, construction projects in the Northwest and Northeast regions have clearly started to recover. The pace of demand recovery in the north is stronger than in the south, but overall domestic seamless pipe demand has not yet returned to peak season levels. Mills in the north are resuming production and increasing shipments, creating some short-term pressure on market inventory digestion.
From a psychological perspective, due to the uncertainty surrounding the peak season demand recovery, the market's cautious wait-and-see attitude has not fundamentally changed, and merchants are not very active in restocking.
In summary, as we move further into September, some markets may see an increase in transactions typical of peak season demand. Coupled with the potential for new policy expectations, prices have a solid floor but are temporarily capped by demand. A price reversal is waiting for the right opportunity.
