Since recently in July, prices of raw material for galvanized (GI) pipes experienced a significant upward change affecting procurement for the entire construction sector. This review summarizes the trend for July's prices and provides a short-term outlook based on recent trends in the marketplace.
Snapshot of Price Trend (up to July 24)
The July raw material rates of GI pipe can be categorized broadly under two phases:
Early July (July 1–10):
The market was fairly stable with prices moving moderately between CNY 3240 and 3270 a ton.
Mid to Late July (July 11–24):
A sharp rally began around July 18, with prices climbing to:
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CNY 3290 on July 18
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CNY 3360 on July 20
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CNY 3470 on July 23 (peak)
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Minor retracement to CNY 3430 on July 24
From the early July low (around CNY 3220) to the latest top, there was a 7.7% rise in the market level, signaling a change in supply-demand conditions.
What's Behind the Boom?
The steep price increase in late July is primarily driven by policy intervention and forced production cuts, which effectively reshaped the supply side of the market.
Here is a list of the top contributing factors:
Policy-Driven Supply Control:
Steelmaking was intentionally curtailed by regulators in late July as part of a larger environment and capacity reduction campaign. This supply constraint induced by policy was primarily responsible for that steep price jump.
Stubbornly High Raw Material Prices:
Upstream raw materials—such as zinc, coal, and iron ore—continued to climb in price, increasing production costs across the board.
Bullish Sentiment:
Positive indicators from downstream markets, specifically infrastructure construction and housing construction, caused demand estimates to grow.
Low Inventory Levels:
Steel mills and distributors also maintained quite low stocks, so they experienced a strong pricing effect once demand surged.
Short-term Forecast: What Lies Ahead
With the rally in prices now indicating a slight ease, what lies ahead in the next couple of weeks?
| Time Frame | Expected Price Trend | Notes |
|---|---|---|
| 1-Week | Sideways or minor fluctuation (CNY 3400 ± 50) | Market might absorb recent gains |
| Late July – Early Aug | Slight correction (CNY 3350–3400) | Depends on policy stance and end-user demand |
| Mid-Term (August) | Cautious optimism for stable or firm prices | Watch additional government measures and restocking trends |
The raw material prices rally in July for GI pipe was mainly due to government-regulated production, stable raw material rates, surging demand potential, and constrained stocks. This multi-pronged situation also means that volatility is set to persist until early August.
It is time for purchasers to check procurement schedules and be in close touch with providers to manage potential price fluctuations. Should you require current rates or product suggestions, our staff is available to assist with planning requirements.
