March 2026 Research Report on Chinese Steel Pipe Production

 

1、 Research Background and Object

China reduced its steel output by 3.6% y/y in January–February.At the end of March, based on the comprehensive tracking demand for production costs and profitability of segmented varieties in the domestic steel industry, we selected 60 parent process steel pipe production enterprises nationwide as samples for research, following the research mode of rebar, hot coil and other varieties. These enterprises cover different coastal and inland regions, involving major categories such as seamless steel pipes and welded steel pipes, and can comprehensively reflect the overall operational situation of the domestic steel pipe production industry.

2、 Production cost situation

（1） Overall cost level

Research data shows that at the end of March, the average tax inclusive production cost of sample steel pipe production enterprises nationwide was 3420 yuan/ton, an increase of 41 yuan/ton compared to the previous month, with a growth rate of 1.21%. Compared to varieties such as threaded steel and hot coils, the overall production cost of steel pipes is relatively high, mainly due to their more complex production processes, higher precision requirements for steel raw materials, and a larger proportion of energy consumption, equipment loss, and other costs in the processing flow.

（2） Regional cost difference

Coastal areas: This survey covers 22 steel pipe production enterprises in coastal areas, with an average production cost including tax of 3385 yuan/ton, an increase of 38 yuan/ton month on month, or 1.13%. Coastal areas have certain advantages in the procurement and transportation costs of raw materials such as iron ore and coal due to their convenient transportation conditions. At the same time, the steel industry cluster effect in the region is obvious, and the upstream and downstream industrial chains have a high degree of synergy, which can effectively compress some intermediate costs. However, due to the recent rise in international iron ore prices, the cost advantage of raw materials in coastal areas has been weakened, resulting in a slight increase in costs compared to the previous period.

Inland region: The average production cost including tax of 38 sample enterprises in inland region is 3442 yuan/ton, an increase of 43 yuan/ton month on month, with a growth rate of 1.27%. Inland areas are far from ports, with long transportation distances and high costs for raw materials. In addition, energy supply is tight in some areas, and electricity and coal prices are relatively high, which has pushed up overall production costs. In addition, the production scale of steel pipe enterprises in inland areas is generally smaller than that of coastal enterprises, and the scale effect is insufficient, which also makes it difficult to effectively reduce the unit product cost.

（3） Cost composition analysis

From the perspective of cost composition, the proportion of raw material costs is about 72%, among which the rise in prices of raw materials such as iron ore and steel billets is the main factor driving the cost increase. The average price of Mysteel (62%) iron ore index in March was $108, up $7 from the previous month, driving up the price of steel billets. The average ex factory price of Tangshan steel billets including tax was 2987 yuan/ton, up 52 yuan/ton from the previous month, directly increasing the raw material cost of steel pipe production. The proportion of energy costs is about 15%. Due to the rise in domestic oil prices, the transportation costs of enterprises and the fuel and electricity costs in the production process have increased. The proportion of labor costs and manufacturing expenses is 8% and 5% respectively, with relatively small month on month changes. However, with the gradual rise of domestic labor costs, the long-term upward pressure on labor costs still exists.

3、 Profit Analysis

（1） Overall profitability level

In March, the average profit of sample steel pipe production enterprises was -12 yuan/ton, a decrease of 5 yuan/ton compared to the previous month. Although there has been a slight increase in the price of steel pipe products recently, the increase has not covered the cost increase, leading to further deterioration of the company's profitability. Compared with varieties such as rebar and hot coil, the profitability level of the steel pipe industry is slightly better than rebar, but not as good as hot coil, and overall it is still on the brink of loss.

（2） Regional profit difference

Coastal areas: The average profit of sample enterprises in coastal areas is -8 yuan/ton, a decrease of 3 yuan/ton from the previous month. Coastal steel pipe enterprises have a certain degree of price flexibility in market competition due to their cost advantage. Some enterprises have alleviated the profit pressure caused by rising costs to a certain extent by optimizing their product structure and increasing the production and sales of high value-added steel pipe products. However, due to the overall weak market demand, product price increases have been sluggish, and the company's profitability has not yet turned losses into profits.

Inland regions: The average profit of sample enterprises in inland regions is -15 yuan/ton, a decrease of 6 yuan/ton from the previous month. Enterprises in inland areas have high costs and relatively limited market coverage, making it difficult to increase product sales prices, resulting in sustained low profitability. Due to weak financial strength and poor risk resistance, some small and medium-sized enterprises are facing significant survival pressure, and even experiencing production cuts or shutdowns.

（3） Profit influencing factors

Market demand: In March, the overall domestic steel pipe market demand showed a slow recovery trend, but the recovery was not as strong as expected. The infrastructure sector, as the main driving force for steel pipe demand, has limited demand release due to factors such as slow project commencement pace and insufficient funding availability; In the manufacturing industry, especially in industries such as machinery and automobiles, the growth rate of production has slowed down, and the demand for steel pipes has also weakened. The weak market demand makes it difficult for product prices to rise significantly, and the profit margin of enterprises is continuously compressed.

Market competition: The overcapacity problem in the domestic steel pipe industry is prominent, and market competition is fierce. Some companies adopt a low price competition strategy to compete for market share, further lowering product prices and making it difficult to improve the overall profitability of the industry. Meanwhile, imported steel pipe products have gained a certain share in the high-end market due to their brand and technological advantages, which has also had a certain impact on the profitability of domestic enterprises.

Cost increase: As mentioned earlier, the continuous rise in costs such as raw materials and energy is the direct cause of the decline in corporate profits. Enterprises face significant challenges in cost control. Although some companies have reduced costs by optimizing production processes and strengthening supply chain management, it is still difficult to fully offset the negative impact of cost increases.