Can seamless steel pipe market improve during weak June off-season

Against a backdrop of recovering profits, rising operating rates and falling maintenance volumes, seamless steel pipe extended the downtrend starting from late April until the end of the month.Prices saw a roller-coaster movement across April and May.

China’s Bulk Commodity Index (BCI) stood at -0.16 in May, with an average price change of -1.78%.The reading indicates manufacturing activity contracted month-on-month in May while the overall economy maintained stable operation.

It shows that the price surge for seamless steel pipes in late April was largely driven by speculative hype, lacking solid fundamental support.This triggered the sharp price slump in May.

In addition, profit margins for steel mills have shrunk sharply, and high-cost pipe manufacturers have slipped into losses.June marks the traditional market off-season, so a new wave of production suspension and maintenance may emerge, which will gradually halt the fall in seamless steel pipe prices.

Nevertheless, pre-Dragon Boat Festival restocking will affect market sentiment.It is estimated that seamless steel pipe prices will rise first and then fall in June.

Upstream: Loose supply-demand weighs on ore prices, dragged down by downstream seamless steel pipes

The domestic imported iron ore market trended straight down in May.Monitoring data shows that as of May 31, the port average price of Australian 62% PB fines reached 372.78 yuan/ton, down 24.39% from early May, with a maximum swing of 25.77%.

The downturn stemmed from loose supply and demand conditions that cannot sustain high ore prices, coupled with downward pressure from the downstream seamless steel pipe sector.

In terms of inventories, major national port stocks remained roughly at 101 million tons in May.Port inventories hit 101.86 million tons on May 27, the highest level since 2026.Weekly average ore shipments from mines stood at 21.5 million tons in May.Both figures signal mounting supply pressure for iron ore.

For steel mill inventories, the average imported ore stock reached 284,100 tons in late May, equivalent to 23 days of consumption, staying within a normal range.It reflects that steel mills adopt a purchase-on-demand strategy amid falling ore prices, with subdued buying interest.

The market pattern of supply exceeding demand became increasingly prominent, dragging ore prices lower.The sharp decline in seamless steel pipe prices downstream further accelerated the slump in imported ore.

On the international side, the Platts Index fell below 50 US dollars/ton, while Indian fines on the offshore market dropped to 49 US dollars/ton.Both recorded monthly declines exceeding 20%.Persistent falls in international ore prices exerted heavy downward pressure on domestic imported ore markets.

Ore traders had no choice but to cut offers and conclude transactions at low prices to ease inventory pressure.

It is learned that iron ore arrivals from Australia and Brazil fell by a total of 1.5 million tons between May 27 and June 2, bringing port inventories down to 100 million tons.Supply pressure in the ore market may ease before the Dragon Boat Festival, which could support ore prices from further falling.

Based on a survey of hundreds of iron ore market participants conducted by 100ppi for June: 13% bullish, 28% neutral and 59% bearish.It is expected that ore prices will continue falling in June, yet the decline will moderate.The projected price range stands between 330 yuan/ton and 380 yuan/ton.

Seamless Steel Pipe: Mounting supply pressure brings a bleak May market

Soaring steel mill profits encouraged production resumption.Social inventories climbed and spot supply expanded, forming a fundamental landscape of oversupply.

Cooling speculative sentiment triggered successive limit-downs in steel futures.Seamless steel pipe prices kept sliding, bringing a cold spell to the steel industry in May.

SupplyData shows that as of the end of May, the blast furnace operating rate of 163 national steel mills reached 81.22%, edging up 0.14% week-on-week and jumping 2.35% month-on-week, rising for eight consecutive weeks.However, only 65.03% of steel mills remained profitable, plunging 17.79% week-on-week and falling for five straight weeks.

Data from the China Iron and Steel Association shows average daily crude steel output hit 1.7458 million tons in mid-May, rising another 3.43% on a ten-day basis and hitting a 12-month high.

It demonstrates that steel mills rapidly restarted production after the earlier steel pipe rally, leading to surging spot supply and triggering the sharp May price drop.Side effects of blind production resumption gradually emerged, trapping the industry in a vicious cycle: producing more despite mounting losses.

It is estimated that steel mills will increase maintenance arrangements and shift production to export orders amid the June off-season.Spot inventories will gradually ease, and the decline in seamless steel pipe prices will moderate.

MaintenanceIncomplete statistics from 100ppi show that daily hot metal output affected by blast furnace maintenance reached 268,100 tons at the end of May, falling another 63,700 tons month-on-month.Supply pressure in the spot market will remain heavy in June, and the overall downward trend is hard to reverse.

InventoriesBy the end of May, social inventories of five major steel products rebounded to 9.4824 million tons, up 4.35% month-on-month.CISA data shows steel mill inventories rose to 13.9815 million tons in mid-May, growing 7.53% month-on-month.

It reflects the typical “buy on rise, hold off on fall” mentality among downstream end users amid sliding seamless steel pipe prices.Rising inventories further intensified price declines.

DownstreamNational Bureau of Statistics data indicates the growth rate of national real estate development investment in January–April edged up 1 percentage point from January–March.The growth rate of housing construction area for real estate developers remained flat with the January–March level.

According to 100ppi data, non-metallic building materials including glass and cement posted a price change of only 0.19% in May, staying relatively stable.In contrast, rebar tumbled 23.58%.

Real estate operations remained steady, yet its pull on steel products such as rebar weakened.The cooling of speculative capital behind seamless steel pipes dragged the whole steel market lower.

Macro outlookThe steel industry PMI stood at 50.90% in May 2026, down 6.4 percentage points from April.After rising for five consecutive months, the index retreated again, but stayed above the 50 expansion-contraction threshold for two months running.

The new orders sub-index plunged 12.9 percentage points month-on-month in May.The production index registered 53.7%, falling 6.7 percentage points from April but still staying in expansion territory.

Sharp declines across May PMI sub-indexes reveal that distributors and end purchasers grew far more cautious about placing orders with steel mills amid falling seamless steel pipe prices, increasing sales pressure on manufacturers.

The new orders sub-index dropped far more sharply than the production index, signaling a more obvious slowdown in demand and prominent oversupply pressure.

To sum up:The sharp fall in seamless steel pipe prices in May represented a normal correction following the false rally in April.The prominent oversupply pattern on fundamentals was the root cause of price declines.

Steel mills still maintain high operating rates and inventory levels.Under such conditions, the seamless steel pipe market can hardly improve in June amid the off-season.Mounting supply pressure means further price falls are inevitable.

Tags: Can seamless steel pipe market improve during weak June off-season