Since the market opened this year, the traditional seasonal factors have become increasingly weak in the steel market, but there are still some rules to follow. Since April, the rebound of the futures market has effectively boosted the confidence of the spot market. After the steel market has been quiet for a period of time, there is a lively situation during the busy season of “Silver IV”. However, the prices of domestic seamless pipes seem to be out of the free rise in price, and even if raw material billet prices are tested and pulled up, they will still be as old as they are. Even in some markets for rapid shipments, prices fell slightly. Why, then, in the atmosphere of good macroeconomic conditions and a price increase in the steel market, seamless prices have instead stabilized and weakened? Take Linyi, one of the production bases for seamless pipes, as an example to analyze the reasons for this phenomenon.
Figure 1: Linyi seamless pipe spread trend
Shandong is the main production base for seamless pipes in China, among which Linzi seamless pipe is sold well throughout the country. Since April, due to news of shipping speed and favorable news for quotas, Shandong pipe billet price has dropped first and then rose. Currently, the price is low. Point of April 9 price increase of 170 yuan / ton, but after several consecutive days of price increases back to April 1st price. With regard to the frequent fluctuations in the prices of tube blanks, the Linfen tube factory has a relatively small reflection. Only Jinzhengyang has risen by RMB 50/ton. This week, the 108*4.5 hot-rolled base price of Linyi’s mainstream pipe mills remained at RMB 4700-4750/ton, and the actual transaction volume remained. There is looseness. The ex-factory price of the pipe factory has been hard to see improvement, which has caused some influence on the business mentality. However, there has been no apparent improvement in the demand for seamless pipes in the downstream market. The market transactions are general. In order to maintain the normal shipping speed, merchants are more cautious. If the raw material billet price in the later period is weak, the market may find it difficult to price.
Figure II: Linyi mainstream pipe plant inventory
According to mysteel incomplete statistics, as of April 21st, the inventory of five major pipe factories in Linyi was approximately 90,000 tons, a statistical increase of 0.2 million tons from last week. Since the end of March, Linyi Pipeyard’s inventory has increased for 5 consecutive weeks, but this week, the increase has slowed down. It can be seen that the pressure on the inventory of the pipe plant is slight, and the enthusiasm of the merchants to actively make up the inventory is not high. The above figure is considerable. Compared with the same period of last year, the inventory of pipe factories also increased for five consecutive weeks. It began to decline rapidly in late April and the drop was significant. It can be seen that the stage of destocking of pipe factories is approaching. According to mysteel’s research, the total social inventories of the 28 major cities throughout the country were 645,400 tons this week, a decrease of 10,200 tons compared with last week. The digesting speed of social stocks has accelerated, but the digestion rate is obviously weaker than other varieties.
In conclusion, taking Linyi as an example, with the fluctuation of raw material prices, the pipe factory will mainly ship and temporarily stabilize the ex-factory price, and the market will have a strong wait-and-see attitude.