The seamless pipe market will show a V-shaped trend in the second half of 2024

In the first half of 2024, China's seamless pipe market showed a volatile downward trend. Looking forward to the second half of the year, as the national policy to stabilize the economy gradually emerges, there will be opportunities for seamless pipe prices to rise. The increase will mainly depend on changes in costs and demand. It is also necessary to pay close attention to the specific implementation of ultra-long-term treasury bonds. In the national policy With the support of the industry, it is expected that China's seamless pipe market will rise steadily in the second half of the year, showing a V-shaped trend.

1. China’s seamless pipe prices first rose and then fell in the first half of 2024.

The price trend of seamless pipes in the first half of 2024 is almost the same as that of the same period in 2023. However, what is different from 2023 is that the increase in 2024 is ahead of schedule, and the increase and growth rate have slowed down compared with the same period last year. Demand has decreased significantly compared with last year, so the market adjustment is cautious.

This year is a period when strategic opportunities and risks and challenges coexist, and uncertain and unpredictable factors increase, which brings great challenges to the steel market. Looking at quarters: In the first quarter, the steel market had a strong risk aversion before the holiday, and the futures market fluctuated and weakened. However, the news of the central bank's reserve requirement ratio cut at the end of the month brought a wave of sentiment to the market. The seamless pipe market was affected by frequent environmental protection measures. Due to the impact of production restrictions, the situation has changed to weak supply and demand, with strong support from superimposed costs, and the seamless pipe market has an opportunity to rebound.Then during the Spring Festival holiday, businesses generally took a holiday. During this period, the steel market prices were relatively stable. However, the post-holiday steel market ushered in a "good start" driven by the sentiment of the steel billet market. During this period, the mainstream market price of seamless pipes The increase is 30-80 yuan. Subsequently, there was no emotional support from other news, causing the seamless pipe market price to fall back to pre-holiday levels.

In the second quarter of this year, prices in the entire steel market continued to fall due to lower than expected demand. The seamless pipe market is relatively lagging. It started a downward trend in mid-March. Prices at some pipe factories fell by as much as 300 yuan within the month, and prices in the mainstream market fell by more than 100 yuan. In mid-April, the National Development and Reform Commission stated that it would promote all additional government bond issuance projects by the end of June this year. The construction started before the start of the year, which greatly boosted the confidence of the steel market and led to a warmer trading atmosphere in the seamless pipe market. Subsequently, the price of mainstream pipe factories increased by 60-100 yuan. However, after June, the off-season came, and it was rainy in the south and high in the north. The downstream operating rate has decreased, and the price of seamless pipes has also dropped.

According to data monitoring from Lange Cloud Business, as of June 28, 2024, the average price of 108*4.5mm seamless pipes in the top ten cities across the country was 4,825 yuan, a cumulative decrease of 87 yuan, or 2.4%, from 4,912 yuan at the beginning of the year.

2. Price difference trend between tube blanks, square billets, and seamless tubes

In the first half of 2024, the lowest point of billet was 3,300 yuan, the highest point was 3,700 yuan, and the amplitude was 400 yuan, which was significantly narrower than the same period last year. The lowest point of Xintian Steel Pipe Billet is 3,620 yuan, the highest point is 3,900 yuan, and the amplitude is 280 yuan. The lowest point of Changzhou Dongfang Steel Pipe Billet is 4,000 yuan, the highest point is 4,150 yuan, and the amplitude is 150 yuan. In the first half of the year, the price difference between the north and south tube blanks remained at a reasonable price difference in the range of 150-200 yuan. The lowest point of Linyi Jinbaocheng seamless pipe is 4,430 yuan, the highest point is 4,620 yuan, and the amplitude is 190 yuan. The average ex-factory price difference between tube blanks and seamless pipes is 654 yuan. From the price difference data, the pipe factories in Linyi area are basically at breakeven in the first half of the year. , but considering that the resource circulation within the factory cannot achieve a balance between production and sales, and the increase in seamless pipes in the second quarter is not greater than the increase in pipe blanks, the profits of pipe factories in the first half of the year show a gradual shrinking trend.

3. The operating rate of domestic seamless steel pipe factories in 2024 will increase slightly compared with last year

According to statistics from Lange Steel Network on 200 seamless pipe sample production lines across the country (including 40 production lines in long-process steel pipe plants), as of June 28, the production line operating rate was 62.94%, an increase of 5.62 percentage points from the same period last year. The operating rate of sample pipe factories in Linyi area was 40%, an increase of 1.9 percentage points from the same period last year. The total inventory of sample pipe factories in Linyi area is 75,700 tons, a decrease of 7,300 tons compared with the same period last year. The operating rate of 32 production lines in Liaocheng area was 62%, a decrease of 24 percentage points from the same period last year. Raw material inventory is 421,500 tons, an increase of 118,700 tons compared with last year.

4. Domestic seamless pipe exports showed a downward trend in the first half of the year

According to data from the General Administration of Customs, my country exported 430,200 tons of seamless pipes in May, a month-on-month decrease of 14.69%, and a year-on-year decrease of 21.15%; from January to May, my country exported a total of 2.165 million tons of seamless pipes, a year-on-year decrease of 15.15%. In May, my country imported 9,500 tons of seamless pipes, a month-on-month decrease of 18.1%, and a year-on-year increase of 2.15%; from January to May, my country imported a total of 49,900 tons of seamless pipes, a year-on-year increase of 11.63%. Judging from the existing data, although seamless pipes showed a certain degree of decline year-on-year in the first quarter and the beginning of the second quarter, overseas demand still performed well and maintained a certain degree of resilience; in terms of export varieties, the export volume of oil and gas drilling seamless pipes The larger decline indicates that there has been a certain adjustment in overseas demand.

5. China’s seamless pipe market outlook in the second half of 2024

1) The market will still face many uncertainties and challenges in the second half of 2024

Since the beginning of this year, our country's national economy has continued to recover and has generally rebounded for the better, laying a good foundation for achieving the annual economic and social development goals. Preliminary accounting data from the National Bureau of Statistics show that the gross domestic product (GDP) in the first half of 2024 increased by 5.3% year-on-year. Based on this, China's overall economic strength and foundation are relatively deep, and it has strong resilience and room for development. China's economy is facing difficulties and challenges, and its ability to withstand stress has been tested. The economy has continued to recover and the overall rebound is improving. It remains an important engine for world economic growth.

2) The country actively introduces policies to stabilize external demand and expand domestic demand.

Weak global economic growth, slowing global trade, and insufficient external demand remain the biggest constraints to my country's foreign trade development. Domestic macro policies and industry preference news were released, such as the gradual cancellation of purchase restrictions for real estate, financing coordination and guaranteed delivery of buildings, the issuance of national long-term special bonds, and this year's crude steel production control policy. As a result, the price of the entire domestic steel market has become stronger. Although during this period, There is a weak downward trend, but with the support of news and cost, the steel futures market can turn to an upward trend after a break. The seamless steel pipe market is affected by many factors, including the macroeconomic environment, policies and regulations, and technological progress. Macroeconomic conditions have an important impact on the seamless steel pipe market. The driving effect of economic growth on demand has enabled the seamless steel pipe market to maintain rapid growth. Government policies and regulations also have an important impact on the development of the seamless steel pipe market. Policy adjustments in environmental protection, energy and other aspects will directly or indirectly affect the seamless steel pipe market demand. Technological progress has changed the production process and performance of seamless steel pipes to a certain extent, improved the quality and efficiency of seamless steel pipes, and broadened its application fields in various industries.

3) The demand for seamless pipes is reduced and the market needs to self-adjust and repair.

Judging from the start-up situation of pipe factories, since the start of construction this year in Linyi area, the operating rate of local mainstream pipe factories has been maintained at around 40%, and the operating rate in Liaocheng has been maintained at around 60%. Some pipe factories in Linyi area have been integrated and optimized, making Linyi area without The production capacity of seam pipes has shrunk, and its price competitiveness has also significantly weakened. Although the current supply side of seamless pipes has slightly reduced production capacity compared with last year, it is still a high-cost situation with strong supply and weak demand. The supply-side reduction will undoubtedly improve the current situation of oversupply exceeding demand, but there will still be some new production capacity added, the market will be more regionalized, and low-price resources will be more dominant.

Conclusion:
China's seamless pipe prices will show a sluggish trend in 2024, with the price index declining year-on-year. The seamless pipe industry faces challenges such as cost decline, shrinking profits and overcapacity. The cost of seamless pipes shows a downward trend, and the price of pipe blanks continues to decline. Falling commodity prices and weakening market demand have led to weaker cost-side support. The overall profits of the industry have narrowed, the profits of production and processing enterprises have decreased, and competition in the trade sector has become fierce. Although the recent decline in billet prices has led to the recovery of profits of seamless pipe factories, the profitability situation is still not optimistic. The problem of overcapacity is becoming increasingly serious, and the elimination of backward production capacity has become an industry development trend. The national seamless pipe production capacity has reached 40 million tons, but consumption is insufficient, and some companies have turned to build factories abroad.

We are currently in a period of domestic economic transformation, with traditional demand weakening and emerging fields such as automobiles and home appliances likely to bring growth points. In order to meet economic expectations, policy needs to increase stimulus policies to promote infrastructure, real estate, manufacturing, etc. from weak to strong, and stimulate demand for steel. After the steel industry adjusts its production capacity in the second half of the year, demand for seamless pipes is expected to gradually pick up after July. As the supply and demand pattern remains unchanged, supply from steel companies is high and downstream demand is weak. The market's macroeconomic expectations are not positive enough, and the market price of seamless pipes continues to fall, and the decline widens. A major domestic meeting is about to be held. Driven by emotions, the market may be improving. However, due to the weak industry, the upside space is limited. At the same time, prices are also expected to fluctuate upward, but prices may be difficult to reach the highs at the beginning of this year.

Hunan Standard Steel Co., Ltd is a well-known Carbon Steel Seamless Pipe manufacturer and exporter, known for its precision engineering, light weight, corrosion resistance, reasonable structure, complex details, and economy. We have set an example in terms of quality and performance by manufacturing and supplying CS seamless pipes. For any request, please contact us: info@hu-steel.com

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