Seamless Steel Pipe Market Is Not Optimistic Under the COVID-19

Under the COVID-19 epidemic situation, the seamless steel pipe market is not optimistic, and the production rhythm must not be chaotic.

With the effective control of the new coronary pneumonia epidemic in China and the accelerated pace of resumption of production and production, the fundamental pressure of the domestic seamless steel pipe market has been relieved to some extent, but with the accumulation of external negative factors, the seamless steel pipe market will face more Downside risk.

First, the spread of foreign epidemics has heightened concerns about the global economic recession. As of 9 a.m. Beijing time on April 13, there were 1.84 million cases of new coronary pneumonia diagnosed, 114,000 deaths, and 403,000 cases cured. At present, the epidemic situation abroad is still grim, and the impact on the global economy is becoming more and more obvious. On March 23, the International Finance Association released a report, which expected that the global economy will grow negatively by 1.5% this year; on March 30, the Bank of China Research Institute released a report that expected the global economy to fall into recession by 2020; the International Monetary Fund also previously considered There will be a severe recession. It is foreseeable that the global economic recovery process will be very slow due to the severe impact of the epidemic.

Secondly, as one of the important roles of the global economy, China is also "implicated" and its demand may not be as expected. This is mainly manifested in the following aspects:
First, exports of seamless steel pipes will decrease. China's seamless steel pipes are mainly exported in the form of products, and some products have been cancelled in April, and new orders have been greatly reduced, which directly affects the steel demand intensity of domestic manufacturing.

Second, the digestion of the original inventory will affect the performance of the current inventory. Due to a long delay in demand this year and a high level of supply, in addition to the relatively high terminal inventory of some manufacturing companies, some construction companies also increased their stocks in March. These inventories have a certain digestion cycle, which will affect the consumption of new resources to a certain extent.

The third is that the release of domestic demand may not fulfill the positive expectations. From the PMI (Purchasing Manager Index) of the steel industry released by the China Iron and Steel Logistics Professional Committee, domestic demand for seamless steel pipes has recovered in March. The new orders index was 38.5%, an increase of 5.8 percentage points from the previous month. Due to the rapid spread of foreign epidemics and the decrease in external seamless steel pipe demand, the new export order index fell 15.2 percentage points from February to 27.3%, dragging down overall demand.

Finally, a gradual rebound in supply will curb price rebound. Affected by factors such as falling scrap prices and relatively strong rebar prices, seamless steel pipe production rebounded rapidly in the middle and late March. The superimposed part of the equipment that was shut down for maintenance at the early stage resumed production, and it is expected that the digestion pressure of seamless steel pipe inventory will continue to increase in the later period.

In short, many pressures caused by the spread of foreign epidemics will follow, and the market outlook is not optimistic. Under such circumstances, seamless steel pipe factories should strengthen self-discipline and strictly control the rhythm of production. In particular, they should seize the timing of domestic demand release to speed up destocking to alleviate the current pressure on the total inventory of seamless steel pipes and maintain stable and healthy operation of the market.

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