Mysteel: Supply-Demand Imbalance and Plum Rain Season to Drive Seamless Pipe Prices Lower in Q2

As China’s seamless pipe market grapples with persistent oversupply and weakening seasonal demand, prices are poised for a volatile Q2. With the monsoon season threatening to derail southern demand and policy support falling short, here’s a detailed outlook on price trends, supply dynamics, and regional demand risks.

1. Price Trends: Fragile Stability

Current Prices (as of May 16, 2025):

• National average price for 108*4.5mm seamless pipes: 4,341 RMB/ton (+1 RMB/ton MoM, -469 RMB/ton YoY).

Short-Term Drivers:

• Tariff policy easing and rising raw material costs provided temporary support in May.

• Prices edged up marginally, but annual declines highlight deeper structural weaknesses.

Outlook: Prices may hold steady in early Q2 but face downward pressure as monsoon impacts intensify.

2. Supply: High Production Meets Weak Demand

Production:

• Weekly output: 369,500 tons (-300 tons WoW, +13,600 tons MoM).

• Capacity utilization: 80.29% (+2.96% MoM), nearing operational limits.

Inventory Pressures:

• Factory stocks remain high YoY, signaling weak demand absorption.

• Raw material inventories fell, reflecting mills’ pessimistic demand outlook.

Key Risk: If monsoons slash southern demand and mills delay production cuts, oversupply will worsen.

3. Demand: Regional Divergence Emerges

Recent Trends:

• Weekly sales: 15,694 tons (+4.52% WoW), driven by pre-monsoon restocking.

• May daily sales: +4.52% YoY, but momentum faded by mid-month.

Monsoon Impact:

• South China: Outdoor construction halts, logistics disruptions, and energy pipeline delays.

• North China: Resilient demand from renewable projects (e.g., hydrogen pipelines, solar).

Q2 Forecast:

• May: Moderate demand supported by policy hopes and pre-monsoon orders.

• June: Southern demand collapses (-15–20% YoY), dragging national consumption into negative territory.

4. Q2 Price Outlook: "High First, Low Later"

Early Q2 (May):

• Prices stabilize on cost support and residual policy optimism.

Late Q2 (June):

• Southern monsoon cripples demand, while northern resilience fades.

• Prices enter a downward cycle unless mills aggressively cut output.

Critical Risks:

1. Monsoon Severity: Prolonged rains in the south could deepen demand contraction.

2. Mill Discipline: Failure to reduce production risks inventory glut and price crashes.

3. Raw Material Swings: Policy-driven spikes in coal/iron ore could disrupt cost calculations.

Strategic Takeaways

• For Mills: Prioritize inventory reduction and flexible production to avoid oversupply.

• For Traders: Shift focus to northern markets; hedge against southern monsoon risks.

• For Buyers: Delay bulk purchases until June, when prices may dip further.