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Summary: Reviewing November's seamless pipe price trends, the market showed a generally weak and fluctuating trajectory. The basic fundamentals reflected weak supply and demand, with low market activity. Due to environmental restrictions in Northern China at the start of the month, pipe mill operations gradually increased later, though orders remained average. Inventories at pipe mills slightly accumulated compared to early November. Overall, pipe mills prioritized volume over profit. By late November, worsening construction conditions in many regions, coupled with mounting financial pressures on downstream buyers, led to cautious market sentiment and shrinking demand. The seamless pipe market will likely maintain this weak supply-demand dynamic in December. In this article, we review November's seamless pipe fundamentals and provide a brief forecast for December price trends.
Seamless Pipe Prices Declined in November:
According to Mysteel statistics, as of November 30, the average price of domestic seamless pipes (20#, 108*4.5mm, unless otherwise stated) was 4,460 RMB/ton, down 109 RMB/ton (2.44%) from 4,569 RMB/ton on October 31. In November, raw material prices fluctuated, demand in Northern regions gradually decreased, and seamless pipe prices weakened. However, with the winter storage season approaching, most pipe mill prices stabilized, with narrower price reductions in mid-to-late November.
Pipe Mill Profit Margins Significantly Compressed:
Due to weak price trends and the prevalence of high-cost billets at mills, theoretical profits saw a significant contraction compared to October. In late November, raw material costs remained firm relative to seamless pipe prices, further maintaining low profit margins. As of November 30, billet prices in Shandong were 3,640 RMB/ton, down 30 RMB/ton month-on-month. For 20# hot-rolled Ф108*4.5mm seamless pipes, sample enterprises in Shandong reported an average profit of -150 RMB/ton, an 80 RMB decline from -70 RMB/ton at the end of October.
Supply Showed a Low-to-High Trend in November:
Environmental restrictions early in November reduced operating rates in Northern China. As these restrictions eased, pipe mill production gradually recovered. However, limited orders constrained the pace of recovery. By the end of November, production remained at mid-levels. According to Mysteel’s survey of 33 manufacturers with 122 production lines, weekly output reached 32.43 million tons, up 0.17 million tons week-on-week and 3.99 million tons year-on-year. Capacity utilization was 70.47%, up 0.37% week-on-week and 8.67% year-on-year. Factory inventory stood at 70.01 million tons, down 0.18 million tons week-on-week but up 2.26 million tons year-on-year. Raw material inventory was 29 million tons, down 0.14 million tons week-on-week and 0.12 million tons year-on-year.
Supply Expected to Decline Slightly in December:
With the market entering a seasonal lull, declining profits will likely prompt more mills to conduct maintenance. Seamless pipe supply in December is expected to slightly decrease compared to November.
Seamless Pipe Transactions Declined Year-on-Year in November:
Demand remained relatively stable at the start of November due to key events. However, as these events concluded and seasonal factors intensified, demand weakened, and market confidence became cautious. Mysteel data from 124 sample trading firms showed daily average transactions of 13,897 tons in November, down 2.87% year-on-year. As construction conditions worsened, demand is expected to further decline in the coming months.
Seamless Pipe Exports Grew in October:
In October, China exported 1,118.2 million tons of steel, up 10.1% month-on-month. Seamless pipe exports rose 17.02% month-on-month to 57.06 million tons. Year-on-year, exports increased by 32.61%.
Despite uncertainties around U.S. policies, companies are preemptively planning future orders. Additionally, investment growth in Middle Eastern oil and gas projects is expected to sustain demand for Chinese seamless pipes.
November highlights:
Prices started high and ended low, with significant profit compression.
Supply recovered from low levels, with slight inventory increases.
Transactions were generally weak, with modest recovery at the end of the month.
Looking ahead to December:
Macroeconomic Factors: Political and economic meetings in December are expected to set a positive tone for the coming year's policies.
Supply: Low profits and weak orders may lead to slight production declines.
Demand: Seasonal demand contraction and tight liquidity will limit activity, although winter storage and exports could provide some support.
Raw Materials: Firm billet prices will sustain production costs, offering partial price support.
In summary, the seamless pipe market in December will likely experience stable and narrow price fluctuations, influenced by weak fundamentals and intermittent support from macro policies and export demand.
