Large‑Diameter Hot‑Rolled Pipe Investment Boom Worsens Structural Overcapacity; Industry Profit Margin Drops Below 0.3%

Sun Yongxi, head of the Expert Committee of the Shanghai Steel Pipe Industry Association, pointed out that the steel pipe industry is currently facing a seemingly contradictory situation: on the one hand, with the widespread adoption of anti‑corrosion technology, bimetallic composite pipes, and other advanced technologies, the theoretical demand for ordinary carbon steel pipes is entering a year‑on‑year contraction channel; on the other hand, regional incremental projects—such as seamless hot‑rolling lines, JCOE welded pipe lines, and stainless steel pipe production lines—are being intensively launched.

This round of heavy investment in large‑diameter hot‑rolled seamless steel pipes has brought multiple negative effects. Structural overcapacity has further intensified, with the industry’s capacity utilisation rate lingering in the 65%–70% range for a long time. Since 2022, China has built or planned more than 10 million tonnes of new seamless pipe capacity, and by 2026, total capacity is expected to reach 44.41 million tonnes. The 115 million tonnes of surplus capacity from hot‑rolled construction wire rods, which were diverted into the steel pipe sector due to the restructuring of the real estate industry, has added 9 million tonnes of new hot‑rolled seamless pipe capacity over the past three years.

Corporate profit margins have continued to be squeezed. In 2026, the average price of seamless pipes has been running at a near three‑year low; in May, the average price was below 4,350 yuan/tonne, far lower than the level above 4,800 yuan/tonne in the same period of 2024. Ren Xiangxiang, president of the Zhengzhou Steel Pipe Branch, stated bluntly at an industry forum that the current industry profit margin is already below 0.3%.

At the same time, exports are being squeezed by both “rising volume but falling prices” and rising trade barriers. From January 1, 2026, seamless pipe products were fully incorporated into the export licence management scope. The EU CBAM carbon tariff has entered a critical period for data reporting; steel pipe production involves multiple processes and complex carbon intensity calculations, so the compliance pressure on export‑oriented enterprises has increased significantly.