Seamless steel pipe prices have limited decline space under multiple restraints

Seamless steel pipe prices have rebounded recently, hitting a new high after 16 months. However, a market correction followed as expected. The excessively rapid price surge has significantly boosted market fear of high prices and wait-and-see sentiment. The current pullback is a reasonable market price correction.

Multiple positive factors dominated by tight market supply will restrict the scope of foam squeezing in the seamless steel pipe market. The phased rebound trend of seamless steel pipes remains unchanged.

In the spring of 2026, the inventory restocking cycle of the seamless steel pipe market was far weaker than in previous years. The maximum social inventory only reached 12.72 million tons, the lowest level for the same period since 2026. On the one hand, massive losses of steel mills last year led to a notable output decline. On the other hand, traditional winter stockpiling basically disappeared in the market. Most small and medium-sized traders operated with empty or low inventories.

Meanwhile, social inventory destocking started as early as early March. The recovery of real estate and infrastructure investment accelerated the rebound in downstream steel demand. The sustained low inventory level laid a solid foundation for the sharp rally of seamless steel pipes during the traditional peak season of March and April.

Domestic steel social inventories have declined for seven consecutive weeks and the downward trend continues. Nevertheless, the skyrocketing seamless steel pipe prices have continuously stimulated steel mill production resumption. Supported by the restart of some bankrupt enterprises and the launch of new production capacity such as Zhanjiang Iron & Steel, crude steel and steel product output in April is expected to hit the highest level in the first half of the year. Therefore, a short-term inventory reconstruction cycle may emerge in the domestic seamless steel pipe market from late May to early June.

China’s daily crude steel output neared a historic high of 2.3 million tons in March. The output figure further expanded in April with more steel mills resuming production. According to the China Iron and Steel Association, the average daily crude steel output of key steel mills in early April stood at 1.6863 million tons, up 3.39% on a ten-day basis and only 0.5% lower year-on-year. The national estimated average daily crude steel output reached 2.2621 million tons, rising 6.55% month-on-month.

Driven by expanding production resumption and discounted shipments, internal inventories of key steel mills rebounded from low levels. As of early April, the total steel inventory of key domestic steel mills was 12.9137 million tons, up 7.12% ten-on-ten. Though increased, mill inventories remained at a low level. In addition, raw materials including iron ore, steel billets, coke and scrap steel all surged sharply, forming high-cost inventory for steel mills.

Market purchasing willingness weakened slightly, yet the tight supply-demand balance in the industry remains unchanged.

At present, seamless steel pipe prices have generally broken through the 3,000-yuan mark. Mainstream steel mills including Shagang and Zhongtian raised ex-factory prices by 400-550 yuan/ton in the latest round, while most small and medium-sized mills implemented price hikes of 100-200 yuan/ton. Sharp increases in factory prices have compressed the profit margins of traders for newly arrived goods.

Without sufficient downstream order support, traders and agents have sharply reduced inventory restocking demand. Analysts from Gangwei Network pointed out that the inventory-restocking-driven market transaction boom is coming to an end. Trader restocking activity has basically ceased amid high pipe prices.

Meanwhile, downstream terminal destocking remains sluggish due to continuous heavy rainfall in southern regions, with low willingness of active high-price procurement. The spot market has shifted from passive destocking to active destocking, making price concessions and profit taking inevitable. Such profit-taking behavior may accelerate the pace and range of market correction, which requires close market attention.

Although the Tangshan Horticultural Expo has little impact on overall crude steel output, production restrictions on rolling mills have triggered a rational correction of previously overheated steel billet prices, driving downstream finished steel prices to adjust downward. However, ultra-low steel billet inventories provide strong cost support.

In early late April, Tangshan steel billet inventories dropped to around 160,000 tons, hitting an ultra-low level in recent years. The market lacks momentum for a sharp decline, with strong downside resistance. Similarly, seamless steel pipes maintain solid short-term cost support. Imported iron ore prices remain above 65 US dollars/ton, while tight coke supply driven by intensified supply-side structural reform keeps coke prices at high levels. High raw material costs will greatly limit the correction space of seamless steel pipe prices.

Overall, the macro economy continues to recover, with improving prosperity in manufacturing industries such as shipbuilding. Rising growth of infrastructure and real estate investment has strengthened market recovery expectations, and the fundamental downstream demand keeps improving slowly.

Spot inventories cannot rebound rapidly in the short term. Seven consecutive weeks of inventory decline have widened the market supply gap. With the upcoming May Day holiday, downstream terminal pre-holiday stockpiling demand still exists. Supported by steady market fundamentals and previously raised steel mill ex-factory prices, seamless steel pipe prices face limited downside despite ongoing corrections.

It is predicted that the current price correction will be controlled within 200-300 yuan/ton. Driven by multiple favorable factors, another round of price rallies will emerge after the May Day holiday before passive inventory reconstruction. Market participants can remain cautious without excessive pessimism.

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