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This week, black futures continued to perform weakly, with an increase in steel mill maintenance activities and a slight decrease in the social inventory of the five major products. Market confidence remains relatively pessimistic. Overseas, most overseas financial assets rose this week, with U.S. initial jobless claims recorded at 227,000 last week, lower than the expected 235,000. Attention will be on Powell's economic outlook speech next Friday. Domestically, economic data remained relatively stable, and market policy expectations have strengthened. For pipe mills, raw material prices have significantly declined, with short-term profits for Shandong seamless pipe mills recovering to some extent. However, orders at the mills are generally weak, with high factory inventories, leading most pipe mills to adjust prices downward. As of August 16, the average price of seamless pipes across 28 major cities nationwide continued to drop by 65 yuan/ton week-on-week, with most markets continuing to see downward adjustments.
Seamless Pipe Prices: According to Mysteel's inventory data, as of August 16, the average price of 108*4.5mm seamless pipes across 28 major cities nationwide was 4,531 yuan/ton, down by 65 yuan/ton week-on-week. Most major markets saw noticeable price drops.
Raw Material Aspect: As of this Friday, Shandong pipe billet prices fell by 250 yuan/ton week-on-week, while Jiangsu pipe billet prices dropped by 200 yuan/ton week-on-week.
Seamless Pipe Prices in Major Cities (108*4.5mm)
Based on the performance of seamless pipe profits, with both finished products and raw material prices continuing to decline, the theoretical profits for pipe mills remained low this week. Taking 20# hot-rolled steel and Ф108*4.5mm seamless pipes as examples, the profit for seamless pipe mills in Shandong sample enterprises was -90 yuan/ton, an increase of 10 yuan/ton compared to the previous week. In Jiangsu, the profit for seamless pipe mills in sample enterprises was 240 yuan/ton, an increase of 20 yuan/ton from the previous week.
Profit of Seamless Pipe Mills in Shandong (Unit: Yuan/Ton)
This week, the prices of hot-rolled billets in Shandong and Jiangsu decreased by 180-250 yuan/ton week-on-week. Some mainstream seamless pipe mills in Shandong adjusted their ex-factory prices downward by 50-100 yuan/ton. On the production side, the output and in-factory inventory of sample pipe mills decreased, while social inventories continued to decline, with traders showing low willingness to restock.
In the market, the off-season effect continues to dominate, with fewer new construction projects and a continued decline in transaction volumes. The expanded price drop in the market this week has led to increased pessimism among traders, with inventories reaching low levels. In the short term, seamless pipe prices in East China are expected to continue operating weakly.
According to Mysteel's research on seamless pipe (123 companies) inventory nationwide, this week, the national social inventory of seamless pipes was 709,600 tons, a decrease of 8,700 tons week-on-week. According to Mysteel's survey of 33 seamless pipe production enterprises nationwide, in-factory inventory was 764,200 tons, a week-on-week decrease of 500 tons, and a month-on-month decrease of 1,700 tons.
Raw material inventory was 282,800 tons, a week-on-week decrease of 9,200 tons, and a month-on-month decrease of 30,300 tons. Seamless pipe demand remains generally low, with downstream companies still facing tight funds. This week, both social and factory inventories saw slight decreases, but the supply pressure from the upstream remains.
Seasonal Changes in Inventory of 32 Seamless Pipe Factories (Unit: 10,000 tons)
This week's production reached 295,800 tons, a decrease of 9,200 tons week-on-week and 5,800 tons month-on-month. The capacity utilization rate was 64.28%, down 2% week-on-week and 1.26% month-on-month. The operating rate was 49.18%, down 0.82% week-on-week and 3.28% month-on-month. Seamless pipe factory profits remain low, with raw material prices significantly declining. Next week, the supply side of seamless pipe factories is expected to remain stable.
Seasonal Changes in Production of 32 Seamless Pipe Factories (Unit: 10,000 tons)
Price Outlook: Steel futures and raw material prices have seen a significant decline, leading some major pipe manufacturers to continue lowering prices. As market prices drop, the cost-side support is insufficient.
Fundamentals: Market demand remains average, with traders mainly restocking on an as-needed basis. Pipe factory inventories remain high and volatile. As we move into August, the extreme heat in the northern regions may gradually recede, potentially improving downstream operations.
Sentiment: Seamless pipe demand is weak during the off-season, with downstream customers continuing to restock cautiously. The market is disturbed by bearish sentiments, and traders are focusing on selling, resulting in intense market competition.
This week, the sharp decline in raw material prices has reduced costs, but pipe factory profits remain moderate. With overall weak demand and significant inventory pressure at factories, the seamless pipe market is expected to remain characterized by weak supply and demand in the short term. Nationwide seamless pipe prices are likely to continue declining next week.
