Trend of steel pipe industry

This year, the iron and steel industry operation trend go from high to low. China’s welded steel pipe output has maintained a year-on-year decline for four consecutive months since July. Data from the National Bureau of Statistics showed that in October, the country’s crude steel output was 71.58 million tons, down 23.3 percent year on year, and the average daily output was 2.309 million tons, the lowest daily output since 2018. Positive results have been achieved in reducing crude steel output.

In the first three quarters of this year, China’s economic development continued the momentum of last year’s growth, and the world economy continued to recover, supporting steel demand and production of square steel pipe. However, great changes have taken place in Chinese downstream steel consumption since entering the third quarter. With tighter policy control environment, weak leading indicators of real estate, slowing growth of added value of machinery industry, weakening demand of construction industry and manufacturing industry, it is expected that steel consumption demand in 2021 will be basically flat or slightly decreased compared with 2020.

Steel prices are a barometer of market conditions. Recently, steel prices fell sharply. The composite price index for domestic steel stood at 136.81 points on Nov. 12, down 13.2 percent from the end of September and up 22.1 percent from the same period last year, according to the China Iron and Steel Association. Steel prices have fallen back to early March levels. With the change of the market situation, steel industry benefits fluctuate quite large. From the monthly profit situation, this year from January to May, steel industry profit of rectangular hollow section rose month by month, in May, it climbed to 60.8 billion yuan high; After June, it showed a month-on-month decline. In October, the industry profit was 25.9 billion yuan, down by more than half compared with May.

What makes the industry feel pressure is that the sharp rise in raw fuel prices has seriously eroded the profitability of the steel industry. Data show that from January to October this year, most raw fuel prices rose more than steel prices. At present, China steel tube manufacturer gradually recovers normal, steel demand is difficult to have a large increase. The price of raw fuel is at a high level, the pressure of electricity cost continues to increase, the price of steel is difficult to rise significantly, and the task of stabilizing the economic benefits of the steel industry is arduous.