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This week, the black series futures market trended downward as supply saw a significant increase. The arrival of the rainy season has created unfavorable conditions for downstream construction, leading to sluggish demand. Data for the five major steel varieties shows a total supply of 8.5151 million tons (+1.4% WoW) and total inventory of 18.5045 million tons (-2.5% WoW). Within the seamless pipe segment, production continues to rise while social inventory has begun to edge upward, indicating a persistent oversupply. Prices are expected to fluctuate within a narrow range next week.
1. Prices
Seamless Pipes: As of April 3, the average price of 108*4.5mm seamless pipes across 28 major Chinese cities was 4,273 RMB/ton, a minor weekly increase of 7 RMB/ton.
Raw Materials: Billet prices trended lower. Shandong billets dropped 10 RMB/ton, while Jiangsu remained flat. The North-South price gap widened slightly to 150 RMB/ton.
Mill Adjustments: Most mainstream mills maintained stable ex-factory prices, though a few raised quotes by 20–100 RMB/ton to test market resilience.
2. ProfitsProfitability for tolling mills across the board decreased this week. Shandong mills reported profits of -90 RMB/ton (down 40 RMB WoW), while Jiangsu mills fell to 140 RMB/ton (down 20 RMB WoW). The combination of high production and stagnant finished prices is eroding margins.
3. East China Market ReviewThe East China market remained largely stable. While raw material costs in Shandong dipped, most mills in the region held their prices steady. Notably, the Hangzhou market saw a small uptick of 30 RMB/ton. Although factory inventories decreased slightly (down 3,900 tons WoW), providing some relief to mills, traders are maintaining a "fast-in, fast-out" strategy. Caution prevails as the market enters April, with expectations centered on a post-holiday (Qingming) period of consolidation.
1. Inventory
Social Inventory: Samples from 123 traders showed social stocks at 704,000 tons, an increase of 1,300 tons WoW. The rainy weather has slowed consumption at construction sites, leading to a passive build-up at warehouses.
Mill Inventory: 30 surveyed mills reported factory stocks at 768,500 tons (down 3,900 tons WoW) and raw material stocks at 344,400 tons (up 300 tons WoW).
2. OutputProduction levels hit 423,500 tons, maintaining the high volume seen last week. The capacity utilization rate remains at a robust 84.93%, with an operating rate of 80.2%. Despite narrowing profits, production enthusiasm remains high as mills work through existing order books.
3. Market Prediction
Costs & Supply: Weakening billet prices in Shandong and Jiangsu are exerting downward pressure on the cost floor. However, mill production is at a monthly high, ensuring an ample—if not excessive—supply of finished goods.
Demand: While demand is releasing steadily in some sectors, the "rainy season factor" is a significant headwind for structural and infrastructure projects. Procurement remains strictly limited to immediate needs (rigid demand).
Sentiment: Traders are bracing for a period of "supply exceeding demand." While mills are attempting to hold prices firm, the lack of strong transaction volume makes a major rally unlikely.
Conclusion: Given the current imbalance between high supply and weather-constrained demand, domestic seamless pipe prices are expected to fluctuate within a narrow range in the coming week.
