Seamless steel pipe prices to see mild adjustments and fluctuate stronger in April

Although the seamless steel pipe industry has entered a new normal, prices still tend to rise around holidays.Overall, seamless steel pipe prices trended upward in April, with a price increase ranging from 40 yuan/ton to 60 yuan/ton.

Two major factors support this market movement.First, low inventories underpin the recent price rebound of seamless steel pipes.In March, affected by environmental protection policies, the pace of production resumption at steel mills lagged far behind price fluctuations.

From the fundamental market perspective, supply growth remained limited.Steel inventories had already fallen to historic lows.New supplies released by restarted steel mills were largely absorbed by low inventory levels, bringing no substantial pressure on seamless steel pipe prices.Manufacturers and traders raised prices amid positive market expectations ahead of the holiday, which came as no surprise.

Second, linked price increases between raw materials and finished steel products pushed the whole market into an upward cycle.Stimulated by a 50 yuan/ton hike in steel billet prices at the end of March, seamless steel pipe prices moved higher accordingly.

Rising finished steel prices further strengthened confidence for raw material price gains represented by steel billets, lifting market prices continuously.Finished steel products followed the upward momentum.Driven by this interactive rally between raw materials and finished goods, seamless steel pipes entered a positive upward cycle.Therefore, the price surge from late March to early April was quite predictable.

Looking ahead to this market cycle, we believe seamless steel pipe prices may surge then correct, yet April market performance remains promising, for the following reasons.

Improving industry prosperity supports further recovery for seamless steel pipes.Statistics show the steel industry PMI stood at 49.7% in March, up 0.7% month-on-month.It has climbed for four consecutive months and hit the highest level since May 2016.

This indicates that after a prolonged downturn, the whole steel industry is gradually recovering and emerging from difficulties.Recovering demand, mild inventory pressure and solid cost support work together.Driven by these three factors, seamless steel pipe prices still have considerable upside potential.

Demand will improve and trading activity is set to pick up.Terminal demand is expected to recover in April.With warmer weather, downstream industries will fully resume construction.Therefore, seamless steel pipe demand in April deserves optimism.

As mentioned above, the rebound in steel mill new order index in March already signals gradual demand recovery for seamless steel pipes, providing momentum for price increases.

In addition, favorable policies released during the Two Sessions may boost new real estate construction projects in the future.This will drive demand for seamless steel pipes and support strong market performance in April.

Steel mills hold obvious price-supporting willingness, stabilizing the seamless steel pipe market.Recently, steel mills successively released April pricing policies, with price hikes becoming mainstream.This means manufacturers generally hold optimistic views toward the April market and helps lift overall market sentiment.

Taking seamless steel pipes as an example, factory delivery prices for construction tubular products were raised to varying degrees in early April.

On balance, positive factors outweigh negative ones for seamless steel pipe prices in April.The market is highly likely to maintain mild strengthening with fluctuations.

However, stimulated by continuous price rebounds, a large-scale production resumption at steel mills is likely to occur later, capping further price gains.Nevertheless, inventory pressure stays mild, so prices will not see sharp corrections triggered by production restart.

To sum up, seamless steel pipe prices will fluctuate within a narrow range and trend moderately stronger in April.

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