Spiral pipe market prices reversed slightly earlier.
Release date:
2016-10-11
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Steel Pipe Knowledge
Judging from the current performance of pipe manufacturers, the upward trend remains intact, and the price center of gravity in the spiral‑pipe market has been pushed higher. In the capital markets, after a rally that began in early June, prices reached a recent peak in early July before settling into a sideways trading range. With no external catalysts yet to break this consolidation, sentiment among traders is unlikely to face sustained downward pressure. For now, the spiral‑pipe market appears poised for a period of high‑level stalemate and consolidation. Recent developments have heightened risks at the upper end of the market; coupled with continued weak and volatile futures, buying interest has waned while wait-and-see attitudes have grown. Under these constraints, any further price gains are likely to encounter resistance. Nevertheless, producers remain firmly committed to supporting prices: ongoing production cuts, combined with bullish expectations for the “Golden September” season, keep supply tight and reinforce pricing support, making it difficult for prices to fall sharply. Overall, the near‑term outlook points to a phase of oscillating consolidation, punctuated by brief pullbacks as traders adjust positions. Meanwhile, the key driver of steel prices—costs—remains on track for further declines. Whether in iron ore or steel futures, while speculators may be seeking opportunities to go long, the time for strategic bullish positioning has not yet arrived. We recommend sticking to the earlier strategy of selling short on rallies at technical resistance levels. Hot‑rolled coil, though showing some unusual behavior, trades at relatively low volumes. Its underlying dynamics mirror those of rebar: cost factors will ultimately bring its prices back toward fundamentals. Iron‑ore import prices have been declining steadily for several months, falling below $100 per ton last month—down from a year‑end peak of around $140 per ton. This sharp drop stems not only from rapid capacity expansion at mines worldwide this year but also from recent bank audits of ore‑financing risks, which have tightened credit channels and accelerated the downward pressure on iron‑ore prices. Looking ahead, policy signals from the government—particularly its proactive efforts to cut overcapacity in the second half of the year—suggest that the Guoyuan spiral‑pipe market will continue to experience volatility, driven by frequent announcements of production cuts and restrictions. Domestically, local prices are expected to follow broader market trends, with Guoyuan spiral‑pipe prices likely to edge up slightly in the short term.
Judging from the current performance of pipe manufacturers, the upward trend remains intact, and the price center of gravity in the spiral‑pipe market has been pushed higher. In the capital markets, after a rally that began in early June, prices reached a recent peak in early July before settling into a sideways trading range. Given the current trajectory, no external developments have yet emerged to disrupt this consolidation; accordingly, the spiral‑pipe market is unlikely to exert sustained downward pressure on traders’ sentiment.
In the short term, the market may remain in a high‑level consolidation phase. Recent developments have seen heightened risks at elevated price levels, while futures continue to trade weakly and erratically, dampening buying interest and boosting wait-and-see sentiment. Under these constraints, upward momentum in the spiral‑pipe market faces resistance. Nevertheless, raw‑material suppliers remain firm in their pricing stance; ongoing, albeit intermittent, production cuts, coupled with bullish expectations for the “Golden September” period, are keeping supply tight and supporting prices. Consequently, price declines remain limited. Overall, the near‑term outlook points to a volatile, stalled market, with occasional brief pullbacks as traders seek to consolidate positions.
Accordingly, the primary driver of steel prices—costs—remains on track for further declines. Whether in iron ore or steel futures, while speculators may be seeking opportunities to go long, the time for strategic bullish positioning has yet to arrive. We recommend adopting a strategy of selling high at key technical levels. Although hot-rolled coil has shown unusual behavior, its trading volume remains relatively low. Its underlying dynamics are consistent with rebar: cost factors will first bring its price back to fundamentals. Currently, imported iron‑ore prices have been falling steadily for several months, with last month’s benchmark price dipping below $100 per tonne—down from a year‑end peak of $140 per tonne. This sharp decline in ore prices stems not only from the rapid expansion of global mining capacity this year but also from recent bank audits of ore‑financing risks, which have tightened credit channels and further accelerated downward pressure on prices.
At present, this may be linked to the government’s proactive policies aimed at reducing excess capacity in the second half of the year. Consequently, the Guyuan spiral pipe market is likely to experience volatile price movements amid ongoing reports of production shutdowns and output restrictions. The local market is merely following the broader trend, and short-term prices for Guyuan spiral pipes are expected to continue rising modestly.
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