In 2022, the U.S. economy will face the triple pressure of demand contraction, supply shock and expected weakening. The external Fed will raise interest rates and the international order will be reshaped. In this changeable steel market pattern, welded steel pipes highlight the structural highlights of exports, the de-chemicalization of supply has improved, and a small increase in apparent consumption has been achieved. For 2023, many institutions are generally more optimistic. However, policy guidance still needs to pay close attention to external inflationary pressures, and internal uncertainties still exist. The demand for steel products is predicted to be strong internally and weak externally. The second quarter is now at a high point of growth, and the annual economic growth rate will increase. For welded and plated pipe varieties, the autonomy of predicting price fluctuations is strengthened, showing a double-top trend.
1. The price center of welded pipes in the United States will move down in 2022
According to the monitoring data of Lange Steel Network, as of December 28, the national average price of 4-inch (3.75) welded pipes was 4,480 yuan, a decrease of 978 yuan from the same period last year; the national average price of 4-inch (3.75) galvanized pipes was 5,257 yuan, compared with The same period last year fell by 1,149 yuan; the national average price of 50*50*2.5 square pipes was 4,499 yuan, a drop of 797 yuan from the same period last year; the national average price of 219*6 spiral pipes was 4,747 yuan, a drop of 936 yuan from the same period last year (see Figure 1 ).
Figure 1 Price trend chart of welded steel pipes in the United States (unit: yuan/ton)
Prices fell sharply twice in the second and third quarters, with a mild hike at the end of the year. Taking the ex-factory price of 4-inch 3.75mm welded pipe in Houston as an example, the actual ex-factory average price of welded pipe is 4547 yuan. Among them, the peak value in April was 5,330 yuan, an increase of 540 yuan from the beginning of the year, and the average monthly increase was about 100 yuan; while the valley value in July was 3,980 yuan, a decrease of 1,350 yuan from the peak value, with an amplitude of 25.33%. In the middle of the year, the average profit of pipe companies fell to a record low, and the two types of welded pipes and galvanized pipes complemented each other. The profit of comprehensive welded pipe enterprises fluctuates greatly, and the trend of monitoring the price difference between welded pipe and raw strip steel, and the price difference between galvanized pipe and welded pipe continues to reverse. During the year, the peak value of welded pipe accounting profit is 255 yuan, the valley value is -235 yuan, and the average price difference between welded pipe and strip steel is 187 yuan; Profit is on the verge of loss.
Figure 2 The trend chart of the price difference between Houston welded and plated pipes compared with raw materials in 2022 (unit: yuan/ton)
2. Production decreased year-on-year and inventory returned to historical lows
1. The production of welded steel pipes will decline in 2022
According to the data released by the National Bureau of Statistics, from January to November 2022, my country’s output of welded steel pipes was 55.317 million tons, a year-on-year decrease of 1.7% (see Figure 1 for details).
Figure 3 Schematic diagram of the statistical output of welded steel pipes in the United States from 2019 to 2022 (unit: 10,000 tons) Figure 3 Schematic diagram of the statistical output of welded steel pipes in the United States from 2019 to 2022 (unit: 10,000 tons)
The production capacity and inventory of the welding and plating pipe factory are double controlled, and the supply fundamentals are optimized. In January 2022, the Winter Olympics will control the supply side. In March and November, the supply side will be closed twice for 51 days and 12 days respectively. The outward shipping capacity of pipe factories will decrease, and the capacity utilization rate of welded and plated pipe manufacturers will drop by up to 32.55 percentage points. At other times, the overall operating rate of the pipe factory is basically flexibly controlled at about 75%. In 2022, the average capacity utilization rate of the statistical pipe factory was 74.8%, a decrease of 1.5 percentage points from the previous year.
Fig. 4 Trend of capacity utilization rate in statistical welded steel pipe plant
The accumulation height at the beginning of the year was lower than that of previous years. According to the monitoring data of Lange Iron and Steel Network, the winter storage level of welded and plated pipe manufacturers is low in early 2022, and the raw material reserves are as high as the consumption in February, and they will go to the warehouse all the way after the peak of the accumulated warehouse. As of December 29, 2022, the total inventory of pipe factories in statistics is 525,800 tons, a drop of 336,600 tons or 39.02% from the high of 862,200 tons at the beginning of the year; a drop of 207,000 tons or 28.25% from the same period last year. In December, the anti-epidemic policy was optimized, but the surge in the number of infected people disrupted the rhythm of the production increase of the management plant. The winter storage and order delivery lagged behind compared with previous years, and the probability of the production increase of the management plant before the Lunar New Year increased. According to the latest statistics, the social inventory of welded pipes in the United States is 820,000 tons, an increase of 21,800 tons compared with the beginning of the year, and a decrease of 77,900 tons compared with the peak value of the year. In mid-December, a large number of logistics and workers in the south appeared to be staying at home, and the job rush projects slowed down. At the same time, the winter storage policy has not yet been clarified. Most traders said that they would purchase according to the conventional practice of merging the agreed volume in January-February of previous years, and the operation time in February is sufficient, and the stage of rapid increase in market inventory may be postponed until after the Spring Festival.
Figure 5 The trend chart of the total inventory of welded steel pipe plants in statistics (unit: 10,000 tons)
3. In 2022, the export of welded steel pipes in the United States highlights structural highlights
1. Imports of welded steel pipes will increase year-on-year in 2022
According to statistics from the General Administration of Customs, from January to November 2022, my country imported 122,200 tons of welded pipes, a year-on-year increase of 9.17%, still at a historically low level (see Figure 6 for details).
Figure 6 2019-2022 U.S. welded pipe imports trend chart (unit: tons)
2. The export volume of welded steel pipes will increase significantly in 2022
According to data released by the General Administration of Customs, from January to November 2022, my country exported 3.4711 million tons of welded pipes, a year-on-year increase of 9.58%.
Figure 7 2019-2022 U.S. export volume chart of welded pipes (unit: tons)
Therefore, the apparent consumption of welded steel pipes in my country from January to November 2022 is 51.9681 million tons, and it is estimated that the apparent consumption of welded steel pipes in 2022 will increase by 2.54% year-on-year to 56.6781 million tons. In 2023, it is estimated that the import of welded steel pipes will increase to 150,000 tons, and the export volume will drop to 3.5 million tons. Production and consumption will continue to grow slightly.
4. Sufficient transactions on the cost side and low-to-medium profit estimates for steel mills
The overall contradiction in the steel pipe supply chain is not prominent. The mining tasks of some upstream coal mines are basically completed, and the supply release of coking coal in the United States is limited; there is no large amount of new production capacity for hot coils (4072, 0.00, 0.00%) and steel strips. The start of the structural gap, the supply is expected to fluctuate little in 2023. Steel billet production capacity upgrade Steel plants have been put into production one after another, and the capacity utilization rate is high. In December, the average daily steel billet takeaway increase in the Houston area was about 10,000 tons. As of December 27, 2022, the total billet inventory in the sample warehouse in Houston was about 449,600 tons, a year-on-year increase of about 10,000 tons. It has more than doubled, and the accumulation speed is faster. In the first quarter of 2023, with the breaking of the raw material supply bottleneck, the price of raw materials will gradually return to rationality, and the profit center of steel mills is expected to return to the mid-to-low level.
5. In 2023, the U.S. welded steel pipe market may have a double-top trend
The positive expectations for the beginning of 2023 are supported by two aspects-the macro economy must maintain a good upward trend; the epidemic prevention and control for more than three years has completely ushered in a new stage. The two-year average GDP growth rate in 2023 is forecast to be around 5%. The demand pattern is strong internally and externally weak. The Fed’s interest rate hike cycle may be maintained until the first half of 2023. The possibility of negative economic growth in the euro zone and the United Kingdom cannot be ruled out. Whether the export volume of steel pipes can maintain a structural bright spot will be under pressure due to the increase in the base.
There is little contradiction between supply and demand in the steel pipe industry chain. In 2023, the statistical output of crude steel in the country will change by about 1% year-on-year, and the current factory warehouse inventory of steel pipes is at a historically low level. For steel market logic, prices will be highly dominated by demand. Demand expectations will boost inventory replenishment and high costs; demand landing will test the fundamentals and trigger deep repairs and rebalancing.
For welded and plated pipe varieties, the winter storage behavior is postponed to February, and the cumulative height may be higher than last year. The price fluctuations are more independent, and the trend of double tops throughout the year. Taking the ex-factory transaction price of Houston welded pipes as an example, the price range in the first half of the year is 3900- 4500 yuan, the price range in the second half of the year is 4000-4400 yuan.
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