Analysis of the current situation and competitive environment of the seamless steel pipe industry

First, changes in the output and capacity of seamless steel pipes.
Since the reform and opening up, China's seamless steel pipe output has continued to grow, reaching a historical peak of 31.369 million tons in 2014, accounting for 68.8% of global output. Since then, output has gradually declined, reaching about 27.18 million tons in 2020, a year-on-year decrease of 2.86%. At present, the domestic production of seamless steel pipes is close to saturation, and it is expected to fluctuate in the range of 27 million to 28 million tons in the future.
In terms of production capacity, the production capacity of hot-rolled seamless steel pipes has grown rapidly since 2000, reaching 34.705 million tons in 2013. After the supply-side reform in 2016, the production capacity was further released, reaching 42.58 million tons in 2020, and the industry was in a serious oversupply stage.


Second, changes in the profit of seamless steel pipes.
Between 2010 and 2016, with the rapid expansion of production capacity and output, the profit of the seamless steel pipe industry fluctuated and declined, and the average profit in 2016 fell below the break-even line to -7 yuan/ton. After 2016, supply-side reforms promoted profit recovery, and the average profit rebounded to 275 yuan/ton in 2017. However, due to the unresolved problem of overcapacity, profits fell sharply again from 2017 to 2020, with an average profit of only 21 yuan/ton in 2020, and the industry's competitive environment deteriorated.


Third, analysis of the industrial concentration of seamless steel pipes
Regional distribution: East China has the highest production capacity, with Shandong and Jiangsu as the main provinces.
Production line distribution: There are about 459 seamless steel pipe production units nationwide, with a total capacity of about 50.19 million tons. Among them, there are 237 hot-rolled seamless steel pipe units with a capacity of 45.19 million tons, accounting for 87.73% of the country; there are about 220 cold-drawn (rolled) production lines with a capacity of 5 million tons, accounting for 12.27%. In recent years, some units have been shut down due to the elimination of backward production capacity or the suspension of production by enterprises, and the actual production capacity is about 40.74 million tons.


Fourth, the evolution of the supply-side competition pattern of seamless steel pipes
At present, the seamless steel pipe industry is in a serious oversupply stage, with low-profit levels and fierce homogeneous competition. In the next few years, the pace of mergers and reorganizations will accelerate, production will remain the same, and the growth rate of production capacity will decline.
The industry will form three types of enterprises:
1. Seamless steel pipe production enterprises that occupy core technologies: mainly large state-owned enterprises, meet high-end needs, high profits but high technical difficulty.
2. Long-process seamless steel pipe production enterprises with high production capacity: with raw material production capacity, strong cost control ability, covering the national market.
3. Regional small seamless steel pipe production enterprises: meet local needs, low production capacity but can maintain survival.


Fifth, summary
The competition in the seamless steel pipe industry has entered a white-hot stage, and enterprise updates mergers and reorganizations will accelerate. Despite the huge competitive pressure, opportunities and challenges coexist, and the industry is expected to find new growth points in optimizing the structure.