Seamless steel pipe 2023 market review and 2024 outlook

Looking back at the operation situation of the steel market in 2023, the trend of steel prices is relatively similar to that in 2022, with shocks from January to April, weak shocks from April to October, and then steel prices rebounded slightly; The annual average price continued to decline year-on-year, and the fluctuation range narrowed. In 2023, under the background of high interest rates in developed countries in Europe and the United States, global economic growth will be inhibited, compounded by intensifying geopolitical conflicts, great power competition, energy game, extreme climate, etc., most emerging economies will face a greater impact, and global economic uncertainty is still high. Domestic, in the context of the post-epidemic situation, most domestic industries have ushered in recovery, but the domestic real estate weakness, debt risk, internal and external uncertainty impact, the overall recovery process is relatively slow, internal power is still insufficient, suppressing the overall steel demand. The overall performance of the Seamless Pipe industry is also "unsatisfactory", the decline is stronger than other steel varieties, the average price continues to move down, the demand is slightly contracted, the profit shows a stage loss, the factory library is high, and the seamless pipe market is under pressure in 2023. Looking forward to 2024, domestic economic policies continue to exert precise force and are expected to form resonance with overseas economies, and how the seamless pipe market will operate in 2024, we will conduct a brief analysis below.

First, 2023 Seamless Steel Pipe market operation characteristics

1. 2023 seamless pipe average price continues to move down, as of December 21, 2023, seamless pipe price decline is significantly stronger than other varieties, of which the tube price fell 1.14% over the same period (20#, Φ50-130, down 11.69% over the same period last year), thread price fell 2.85% over the same period (20#, φ50-130) Φ20 fell 11.86% last year), hot coil fell 1.11% in the same period (Q235, 4.75mm fell 15.84% last year), seamless pipe fell 5.56% in the same period. The annual average price performance, seamless pipe fell 13.99%, pipe blank fell 11.79%, thread fell 10.78%, hot coil fell 9.82%.

2. The seamless pipe supply is high before and low after, and the national seamless pipe output has increased slightly compared with that of 2022, and the capacity utilization rate of the long process pipe plant is significantly higher than that of the short process pipe plant throughout the year.

3. The annual domestic seamless pipe apparent demand is basically flat, weak real estate, slow release of demand, the activity of downstream steel demand and speculative demand is basically flat, overseas seamless pipe demand continues to maintain growth, January to November seamless pipe exports increased 17.08%.

4. The total inventory of seamless pipes is maintained at a median level, among which the inventory in the factory is maintained at a medium high level and the social bank is maintained at a relatively low level.

5. The annual average profit of seamless pipe contracted significantly, and the profit difference between varieties of steel and general steel expanded.

6. In 2023, the revenue of key seamless pipe enterprises at home and abroad will maintain growth.

Second, price and profit situation

1. The annual average price of seamless pipe in 2023 has moved down significantly

In 2023, the price of seamless pipe is high before and low after the end of January to the end of March, showing a volatile upward trend, and after continuing to shock down from April to November, it stabilized in late November, and the overall price trend of seamless pipe lags behind the tube blank for about 1 month. Among them, the average price of seamless pipes in 2023 is 4,891 yuan/ton, down 291 yuan/ton in 2022, a decline of about 5.56%, and the largest decline in the year is 10.12%, the overall decline is higher than other varieties.

2. In 2023, the price difference between seamless tubes and tube billets shrinks significantly and the profit drops significantly

In 2023, due to the fact that the price of raw materials is significantly weaker than that of seamless pipes, the price difference between seamless pipes and tube billets is relatively contracted throughout the year, and the theoretical profit performance of seamless pipes factory is significantly decreased throughout the year. Taking 20# hot rolled, with 108*4.5mm seamless pipe as an example, the average profit of Shandong Pipe factory in 2023 is about 49 yuan/ton, a significant decrease of 159 yuan/ton compared with 2022, and the average profit of Jiangsu Pipe factory in 2023 is about 260 yuan/ton, a decrease of more than 200 yuan/ton compared with 2022. From the perspective of profit structure, the profits of domestic head enterprises and main high-end variety management enterprises maintain growth, gross profit is maintained between 10-20%, of which some general management profits are basically maintained within 1%, some enterprises have faced losses, variety management and general management profits continue to expand, and the profit differentiation of head enterprises and small and medium-sized enterprises is obvious.

Third, the factory warehouse to maintain the median level of social storage hit the low level of the year

The average monthly inventory of China's seamless pipe production enterprises in 2023 is higher than the level in 2022 and 2021, and the overall trend is high and volatile. In 2023, the peak value of inventory in the factory decreased by 36,200 tons compared with last year, although the price of raw materials rose this year, the cost continued to rise, but the production of production enterprises did not shrink, coupled with the downstream demand is poor, the order volume is not ideal, and the inventory accumulation in the factory.

In 2023, social inventory is currently maintained at a low level in the year, and businesses are afraid of high psychology, near the end of the year, some traders start winter storage, coupled with the market entering the off-season, production enterprises may have production maintenance plans, by then, the inventory pressure in the factory may be alleviated, and social inventory has an increase trend. It is expected that the average inventory of production enterprises and the average social inventory in 2024 will further decrease compared with 2023, and the shock range will shrink.

Fourth, 2024 seamless pipe market operation outlook

1. From the supply side, the seamless pipe production capacity under 2024 continues to increase due to the existence of new entrants, but with some production lines that may exit or stop production, the production capacity or increase is limited; As the overall competition in the seamless pipe market will continue to intensify, the capacity utilization rate in the second half of the year may decline slightly, and the overall output may have a certain downward trend;

2. From the demand side, overseas seamless pipe demand (can become the main) affected by many, or a certain degree of "cooling", domestic demand performance in the first quarter is basically flat, the second quarter demand recovery or accompanied by a certain resistance, the second half of the overall demand is expected to improve marginal, but seamless pipe overall demand performance change or little.

3. From the perspective of raw materials, the difference is more obvious in the aspect of tube billet, and the profit of billet rolling enterprises is maintained at a low level for a long time due to the intensified competitive pressure; Long and short process enterprises or short-term low after a rebound trend;

4. Price prediction: Judging the status quo, next spring seamless pipe price opening probability is large, but space, time or limited, it is expected that seamless pipe price low will appear in July-August, fluctuation range in 4600-5100 yuan/ton, the annual average price or near 4800 yuan/ton. (Take 20#, 108*4.5mm as an example). On the whole, price volatility will increase and the amplitude will increase in 2024.

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