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Summary: This week, steel futures continued their downward trend, with weaker market sentiment and trading activity. Overseas, the strong U.S. economy and a robust dollar are limiting global commodity price growth as the Fed shows no urgency to cut interest rates. Domestically, adjustments in taxation policies and October's financial data point to mixed impacts on the market. Seamless pipe production is gradually recovering, though the industry remains in its seasonal downturn. As of November 15, prices in major cities have continued to decline.
Prices: As of November 15, the average price of 108*4.5mm seamless pipes in 28 major cities was RMB 4509/ton, a weekly drop of RMB 36/ton. Raw material prices also declined, with Shandong billet prices down RMB 60/ton and Jiangsu prices down RMB 110/ton. Pipe mill prices were largely stable, with slight reductions of RMB 30-90/ton at some mills.
Profitability: Raw material weakness contributed to improved profits for northern and southern mills. For example, seamless pipe producers in Shandong reported breakeven profits (RMB 0/ton), an increase of RMB 40/ton compared to last week, while profits in Jiangsu dropped to RMB 200/ton, down RMB 60/ton from the previous week.
Regional Commentary (East China): Shandong's hot-rolled billet prices dropped by RMB 120/ton this week, pushing seamless pipe prices lower across the East China region. For instance, prices in Shanghai, Nanjing, and Hangzhou markets stood at RMB 4540/ton, RMB 4330/ton, and RMB 4470/ton, respectively. Weak demand, coupled with reduced cost support, has led to increased caution among traders who are now prioritizing sales.
Inventory: National seamless pipe inventories decreased slightly to 67.52 million tons, down 0.25 million tons week-on-week. Factory inventories rose by 1.15 million tons to 68.72 million tons. Following the end of production restrictions, northern mills have resumed operations, likely increasing inventories in the coming week.
Price Trends: Falling raw material costs and continued price reductions by major mills suggest further downward pressure on seamless pipe prices.
Supply and Demand: With environmental restrictions easing, production is recovering. However, seasonal demand is weak, and supply-demand imbalances persist.
Market Sentiment: Price fluctuations have created a cautious atmosphere among traders, with limited downstream purchasing activity.
Conclusion: Financial data has fallen short of expectations, and next week is expected to remain a policy vacuum. With the seasonal slowdown and sluggish demand, seamless pipe prices are likely to continue trending lower.
