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This week, the domestic seamless pipe market saw a slight uptick, with the average price increasing by 3 yuan/ton week-on-week. However, the cost side is weakening as raw material prices were adjusted downward. The slight rise in finished product prices in certain markets was primarily a follow-up reaction to pipe mill adjustments. On the macro front, the Federal Reserve announced a 25 basis point interest rate cut on December 11 as expected, lowering the target range for the federal funds rate to 3.50%-3.75%. In the market, futures trended downward, raw material prices fell, and cost support for pipe mills weakened. Under the influence of the seasonal off-peak period, market demand is gradually contracting. Traders showed average enthusiasm for procurement, mainly focusing on maintaining shipment volumes. Driven by the combined effects of weakening costs and shrinking demand, seamless pipe prices are expected to face potential downward pressure next week.
Price Dynamics
Seamless Pipe Prices: According to Mysteel data, as of December 12, the average price of 108*4.5mm seamless pipes in 28 major cities nationwide was 4,236 yuan/ton, representing a week-on-week increase of 3 yuan/ton.
Raw Material Situation: The cost side weakened significantly this week. Shandong pipe billet prices were lowered by 30 yuan/ton, and Jiangsu pipe billet prices also saw a week-on-week reduction of 30 yuan/ton.
Mill Price Adjustments: A survey of 34 sample seamless pipe mills indicates that the ex-factory prices of mainstream mills remained generally stable this week, with only individual mills implementing a slight upward adjustment of 30 yuan/ton.
Profit Performance
Profit Trends: Profitability for tolling seamless pipe mills showed divergence this week.
Shandong tolling mills reported a profit of -60 yuan/ton, remaining flat week-on-week.
East China Regional Analysis
Market Movements: With Shandong and Jiangsu pipe billet prices falling by 30-40 yuan/ton, mainstream seamless pipe ex-factory prices in Shandong remained basically stable, resulting in no change in East China market prices. Quotes in Shanghai, Nanjing, and Hangzhou stood at 4,200 yuan/ton, 4,120 yuan/ton, and 4,170 yuan/ton, respectively.
Supply and Inventory: Output and in-plant inventory at sample mills declined week-on-week, indicating a contraction in supply from production enterprises. However, social inventory in the East China market saw a slight increase, suggesting that resources are transferring from mill warehouses to the market.
Transaction Sentiment: Downstream demand has fully entered the seasonal off-peak period. Overall market transactions are average, with most merchants prioritizing active shipments while maintaining stable quotes. To facilitate transactions, some covert price reductions were observed in the market. Considering both supply and demand factors, East China seamless pipe prices are expected to exhibit a volatile and weak trend next week.
Inventory Outlook
Social Inventory: According to the latest Mysteel survey of 123 seamless pipe merchants, sample enterprise social inventory was 671,900 tons, a week-on-week decrease of 700 tons. Market sentiment is bearish, and demand is poor. Traders feel their existing inventory is sufficient to meet current demand and have low enthusiasm for restocking. Market inventory is expected to decline further next week.
Mill Inventory: According to the survey of 33 production enterprises, in-plant inventory was 733,800 tons, a significant week-on-week drop of 19,900 tons. Raw material inventory decreased by 5,700 tons. With mill profits flat and order intake average, mills have slowed production rhythms and focused on active shipments, successfully reducing inventory pressure.
Production Outlook
Output Trends: Weekly output for sample mills was 380,200 tons, a decrease of 7,800 tons week-on-week.
Capacity utilization: The utilization rate dropped by 1.56% to 76.25%.
Operating Rate: The operating rate fell by 0.99% to 77.23%.
Market Prediction
Futures and Costs: This week, the ferrous futures market trended weaker, and raw material prices moved downward, leading to low-level consolidation for seamless pipe prices. From the upstream perspective, cost support for mainstream mills is fading, profit performance remains poor, and off-peak demand is limiting order intake.
Supply and Demand Balance: Mills are slowing production, leading to a "double drop" in output and inventory, which eases supply-side pressure. On the demand side, as winter deepens, demand in the North will contract further. While the Southern market is less affected by weather, overall downstream performance is lackluster, heavily constrained by capital availability.
Conclusion: Under the pattern of "double weakness" in both supply and demand, coupled with fading cost support, it is expected that national seamless pipe prices will run stable-to-weak next week.
