Since May, affected by the decline in various steel varieties and insufficient demand, the price of seamless steel tubes has also shown a trend of high-level decline. As of the end of June, the price of seamless steel tubes (the national aggregated price for 20# and 108*4.5mm) has dropped from the high point of 6450 yuan/ton in 2022 to 5995 yuan/ton, with the decline rate being less than that of most varieties, but still qualifying as a significant drop.

Recent steel prices have shown a阶段性 bottom, and seamless steel tubes are also in a bottom-building phase. The overall fundamentals of seamless tubes are at a crossroads of supply and demand shifts. Against this backdrop, how will the seamless steel tube market perform in the third quarter? This article will delve into the discussion.

Q1: Price Changes in the First Half of the Year

Seamless Pipe Price Fluctuations:

Looking at the first half-year trend, the 2022 seamless steel pipe market showed a trend of surging and then falling, but the peak was notably lower than last May's levels, thus the overall price fluctuation was significantly weaker than in 2021.

From January to June, as of the end of June, the price of seamless steel tubes stood at 5,995 yuan per ton, an increase of 82 yuan per ton from the beginning of the year when it was 5,913 yuan per ton. The recent price changes indicate that the decline in seamless steel tube prices is occurring at a relatively slow pace.

Price Index Fluctuations of Plain Carbon Steel:

From the price index changes of the five main varieties, the main decline phase occurred in May and June, with the price index of plain steel showing a significant month-on-month decrease in June.

Mysteel seamless tube prices dropped by 301.03 points, a relatively smaller decrease compared to the top five categories. Compared to the beginning of the year, the general steel price index for seamless steel tubes actually increased, further indicating that during the recent price adjustment period, the price adjustment for seamless steel tubes was notably delayed.

Material and Seamless Pipe Price Spread Changes:

From the perspective of billet and pipe billet prices, since May of this year, there has been a significant pullback in both pipe billets and billets, with the pullback in billets being greater than that in pipe billets. The pullback in seamless pipes has been notably less than in raw materials. As of June 30th, taking Shandong and Jiangsu pipe billets as examples, the price difference between seamless pipes and Shandong pipe billets was 1,300 yuan/ton, and the price difference between seamless pipes and Jiangsu pipe billets was 1,710 yuan/ton. After this round of decline, the price difference between seamless pipes and their raw materials has rapidly expanded, and currently, the theoretical profits of most seamless pipe production enterprises are performing well.

Q2 Supply and DemandChange

Supply Side Changes

According to Mysteel's statistics, the 33 seamless tube production companies sampled on our network all saw lower production, capacity utilization rates, and operational rates in the first half of 2022 compared to the same period last year.

As of June 30, 2022, the cumulative output of 33 sampled companies for the year 2022 was 713.48, a decrease of 18.63% year-on-year compared to the first half of last year.

From the perspective of seamless tube production enterprises sampled by Mysteel, this year's supply level of seamless tubes is not as high as last year's, likely due to the weakened domestic demand for seamless tubes and the increased difficulty for billet rolling enterprises to purchase tube blanks. The sustained low supply has also resulted in relatively smaller price declines for seamless tubes during this downturn.

Shift in Demand

According to Mysteel's statistics, based on the trading data of 133 seamless tube trading companies we have tracked, as of the end of June, the year-on-year trading volume for the first half of 2022 has shown a downward trend compared to 2021. The combined trading volume of the 133 sampled trading companies in 2022 decreased by approximately 4.83% year-on-year. Therefore, due to the comprehensive impact of the pandemic and other factors, the domestic demand for seamless tubes in 2022 did not meet the levels of 2021.

From the export perspective, the overseas demand for seamless pipes has been particularly robust, driven by the recovery of global demand and the surge in global oil prices, among other factors.

According to customs data, in May 2022, China's exports of seamless steel pipes reached 410,900 tons, showing a month-on-month increase of 63.06% and a year-on-year increase of 64.16%. From the data of January to May 2022, China's net exports of seamless steel pipes stood at 1,425,500 tons, with a year-on-year increase of 25.43%.

The demand for seamless pipes indicates a slight decline in domestic needs for seamless pipes in 2022, but overseas demand has shown significant growth.