The supply and demand of pipe market will be better than expected in 2019

In the first week after the Spring Festival in 2019, the steel social inventory of rectangular hollow section in 29 key cities was 14.2602 million tons, 4.4017 million tons, up 44.64 percent. By comparing with the inventory, we find that the increment of stock accumulated during the Spring Festival is increased compared with that of last year, but the total stock in the first week after the holiday is slightly lower than that of last year. From the perspective of varieties, the social inventory of building materials in national key cities was 9.5793 million tons, 3.4465 million tons more than that before the festival, up 56.19%.The social stock of plate in key cities was 4.6809 million tons, an increase of 955,200 tons or 25.63 percent over that before the festival. The growth rate of building materials like structural steel pipe in terms of social inventory is significantly higher than the plate varieties.

According to the production and inventory of steel enterprises, on the basis of high production in 2018, the average daily output of crude steel of key large and medium-sized steel enterprises has been basically maintained at about 1.8 million tons since January this year, with an obvious increase compared with previous years. Steel mills, on the other hand, have kept inventories low in recent years, close to the same period last year. During the Spring Festival, the inventory increment of steel pipe suppliers is lower than expected, in which the inventory of building materials slightly increased and plate inventory slightly decreased. From this year’s situation, focus on infrastructure is the key to steady growth as well as the steel demands.

The national development and reform commission (NDRC) has approved infrastructure investment projects worth more than 1.2 trillion yuan, covering urban rail, railway and airport projects. Looking back at the spring of 2018, the steel market was once affected by the start of spring demand due to the limited production and construction. Besides, weak infrastructure investment and other factors also led to a sharp fall in steel prices. But this year, the weather factor become very important. After the Spring Festival, the rain and cold weather successively appeared in many places across the country. It may affect the resumption of construction after the Spring Festival and the starting schedule of demand of cold rolled round steel pipe to some extent. Overall, we believe that the steel supply in the first quarter of 2019 is better than expected.