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Overview: This week saw fluctuations in futures markets and a gradual weakening in transaction volumes. Globally, the November Global Manufacturing Purchasing Managers' Index (PMI) showed a slight month-on-month increase. The OECD predicts 3.2% global economic growth in 2024, with moderate growth of 3.3% in both 2025 and 2026. Domestically, on December 6, the People's Bank of China conducted a 1,909-billion-yuan 7-day reverse repo operation. Meanwhile, the General Administration of Customs introduced 16 measures to facilitate business customs clearance. In the steel pipe sector, northern pipe mills have largely lifted production restrictions, leading to further increases in seamless pipe production this week. However, factory inventory pressure remains high. As the market enters the traditional off-season, demand is average, and supply-demand dynamics remain weak. As of December 6, seamless pipe prices in major cities continued to decline.
According to Mysteel's data, as of December 6, the average price of 108*4.5mm seamless pipes in 28 major cities was 4,429 CNY/ton, down 31 CNY/ton from the previous week. The mainstream market has seen price cuts to boost sales.
By Friday, raw material prices showed mixed trends. Shandong pipe billet prices rose by 20 CNY/ton week-on-week, while Jiangsu prices dropped by 20 CNY/ton. The price gap between Jiangsu and Shandong billets continued to narrow.
Mysteel's survey of 34 sample seamless pipe mills indicated that most prices remained stable, with some mills reducing prices by 20-30 CNY/ton.
With the recent rise in raw material prices, mill profits have continued to shrink. For instance, the profit of a Shandong-based 20# hot-rolled Ф108*4.5mm seamless pipe mill increased to -30 CNY/ton, up 120 CNY/ton week-on-week. In Jiangsu, profits rose to 50 CNY/ton, up 30 CNY/ton from last week. Previously falling raw material prices provided a temporary boost to short-term profits for billet-processing mills.
This week, hot-rolled pipe billet prices in Shandong and Jiangsu fell by 20 CNY/ton week-on-week. Some mainstream seamless pipe factories in Shandong adjusted ex-factory prices by 20-30 CNY/ton. In the East China market, seamless pipe prices fell by 20-50 CNY/ton, with Shanghai prices dropping by 50 CNY/ton to 4,390 CNY/ton. Nanjing and Hangzhou prices dropped by 20 and 40 CNY/ton, reaching 4,300 and 4,380 CNY/ton, respectively. Factory production increased slightly, while factory and social inventories saw modest growth. Despite small declines in raw material prices, market price adjustments were slow, leaving merchants hesitant to restock due to fears of further price drops. Overall market sentiment was cautious, with sluggish transactions and pessimistic expectations for year-end market conditions.
Mysteel's survey of 123 nationwide merchants showed that seamless pipe social inventory fell by 8,900 tons this week to 659,700 tons. Factory inventory from 33 seamless pipe production enterprises rose by 8,200 tons week-on-week to 708,300 tons, up 32,600 tons compared to the same period last year. Raw material inventory declined by 4,100 tons week-on-week to 285,900 tons.
Weekly production rose by 1,800 tons to 326,100 tons. Capacity utilization increased by 0.39% week-on-week to 70.86%, while the operating rate grew by 0.82% to 51.64%. Northern mills impacted by environmental restrictions have mostly resumed production. However, as demand weakens further, inventory pressure at mills is expected to increase. Some mills may halt production for maintenance in mid-to-late December, potentially leading to lower output levels.
Prices: Raw material prices showed narrow fluctuations this week, with most mill prices remaining firm. However, market prices continued to decline, indicating ongoing cost pressures.
Supply and Demand: Seamless pipe production continues to rise, but as the market enters the off-season, further increases in output are unlikely. Northern demand is visibly weaker, exacerbating supply-demand imbalances. Mills may enter winter maintenance periods.
Sentiment: Merchants remain cautious, with limited downstream purchasing activity and weak market confidence.
In conclusion, the northern seamless pipe market has entered the off-season, with weaker demand and heightened supply pressures for upstream enterprises. Prices nationwide are expected to fluctuate with a slight downward bias in the coming week.
