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OVERVIEW:
This week, the black futures market saw a strengthening trend, with upstream raw material prices increasing, leading to improved market sentiment. Overseas, expectations for a U.S. Federal Reserve rate cut have diminished. On the pipe manufacturing side, with downstream factories gradually resuming work and the market seeing a slight uptick, demand has increased. However, orders from pipe factories are moderate, and supply remains stable, with slight decreases in inventory. As of February 21, seamless pipe prices in major cities remained stable.
1. This Week's Review
[Price Movement]
Seamless pipe prices: According to Mysteel's data, as of February 8, the average price of 108*4.5mm seamless pipes in 28 major cities nationwide was 4,432 CNY/ton, a slight decrease of 7 CNY/ton from last week. Most mainstream market prices remained stable, with slight increases in the Liaocheng market.
Raw materials: As of Friday this week, raw material prices rebounded. Pipe billet prices in Shandong rose by 50 CNY/ton, while Jiangsu saw a 10 CNY/ton increase. The price difference between Jiangsu and Shandong pipe billets narrowed by 40 CNY/ton.
Price adjustments in pipe factories: Mysteel’s survey of 34 sample seamless pipe manufacturers indicated that the price of seamless pipes increased by 30-50 CNY/ton this week.
[Profit Margins]
Seamless pipe factory profits have shrunk this week. For example, the profit for 20# hot-rolled, Ф108*4.5mm seamless pipes in Shandong was 0 CNY/ton, a decrease of 30 CNY/ton from last week, while in Jiangsu, profits remained steady at 120 CNY/ton. Raw material price fluctuations are leading to volatile factory profits.
East China Region:
In East China, Shandong’s hot-rolled pipe billet prices increased by 60 CNY/ton week-on-week. Mainstream pipe factories in Shandong raised seamless pipe prices, but the prices in Shanghai, Nanjing, and Hangzhou remained unchanged. Though raw material prices are trending upwards, the market is relatively quiet as the Spring Festival approaches. Dealers are adopting a cautious approach, with inventory levels seeing a slight increase. Expectations for post-Festival market activity are rational.
[Inventory Trends]
According to Mysteel’s survey, the nationwide inventory of seamless pipes increased by 1.13 million tons, reaching 71.05 million tons. The factory inventory decreased by 0.55 million tons, while raw material stock rose by 0.33 million tons. As pipe factories resume operations, factory inventory levels are expected to rise.
[Market Outlook]
In terms of price: Raw material prices remain strong, increasing by 10-50 CNY/ton, supporting price hikes at many pipe factories.
From a supply-demand perspective: Factory output is increasing, with moderate orders and growing inventory levels. Downstream demand is recovering slowly.
In terms of sentiment: Futures prices have risen, improving market sentiment, but operations remain cautious.
Conclusion:
Demand for seamless pipes is gradually recovering, with supply increasing. The market sentiment is improving, and it is expected that seamless pipe prices will fluctuate slightly upward next week.
