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Overview: Following the U.S. Federal Reserve's interest rate cut, this week saw a series of favorable macroeconomic policies. These include domestic reserve requirement and interest rate cuts, along with real estate policy adjustments. The urgency of stabilizing the economy was emphasized in the significant meeting on September 26. The market has gradually formed new expectations, with futures and stock markets showing strength this week and market confidence improving. The domestic seamless pipe market continues to face supply-demand pressure, with major pipe manufacturers maintaining stable quotations. However, prices in the Liaocheng market have risen. As of September 27, the average price of seamless pipes in 28 major cities nationwide has slightly declined.
Seamless Pipe Prices: According to Mysteel data, as of September 27, the average price of 108*4.5mm seamless pipes in 28 major cities was ¥4,343/ton, down ¥12/ton from last week. Mainstream markets saw minor price reductions, but some regions have begun exploring price increases. Raw Materials: As of Friday, raw material prices have risen sharply. Shandong billet prices increased by ¥160/ton week-on-week, while Jiangsu billet prices rose by ¥70/ton. The price gap between Shandong and Jiangsu narrowed.
Mysteel's survey of 34 sample seamless pipe manufacturers shows that most mainstream seamless pipe prices increased by ¥50-80/ton this week.
The profits of seamless pipe manufacturers rebounded significantly after digesting high-priced raw materials. For example, in Shandong, sample companies reported a profit of ¥220/ton for 20# hot-rolled, Ф108*4.5mm seamless pipes, up ¥180/ton week-on-week. The price gap between seamless pipes and billets has narrowed, and further profit reduction is expected.
The seamless pipe prices in the East China market remained stable this week. In terms of production, some mainstream pipe manufacturers in Shandong raised their ex-factory prices by ¥10-50/ton. Output and inventories at pipe mills and traders both declined slightly, with some improvement in sales. The raw material prices in Shandong remained strong this week. The black futures market showed strength, boosting market confidence. However, demand for seamless pipes was weak, and downstream procurement was moderate, with traders maintaining low inventories. The trading atmosphere was average, though macroeconomic expectations improved. It is expected that seamless pipe prices in East China may fluctuate upward.
According to Mysteel's survey of 123 seamless pipe traders, the national social inventory of seamless pipes reached 6.736 million tons this week, an increase of 0.35 million tons from last week. Meanwhile, inventory at 33 surveyed seamless pipe manufacturers fell by 0.64 million tons week-on-week, while raw material inventory increased by 0.43 million tons. With favorable macroeconomic news boosting market confidence and the upcoming holiday, traders are cautiously optimistic and expect restocking activities to rise slightly. Next week, inventory is expected to grow modestly.
Production this week was 3.106 million tons, down 0.49 million tons week-on-week, but up 1.6 million tons year-on-year. Capacity utilization was 67.49%, down 1.06% week-on-week but up 3.48% year-on-year. The operating rate was 55.74%, up 0.82% week-on-week and 4.1% year-on-year. Traders are increasing inventory cautiously, and manufacturers are under pressure to take orders. Some manufacturers plan maintenance around the holiday, which could lead to reduced production next week.
In terms of prices, raw material costs surged this week, and favorable macroeconomic news has supported steel prices. Billet transactions improved, and pipe manufacturers are keen to maintain high prices. As September comes to an end, demand was better than in August, though sales volumes have not surged. Customers remain cautious about restocking, and the overall digestion of seamless pipe inventory has been slow. However, transactions picked up towards the end of the month. Macro sentiment improved as the market began to anticipate favorable developments, with financial policies expected to channel funds into the real economy. In summary, seamless pipe prices are likely to fluctuate upward next week.
