Structural steel pipes demand to stay strong on infrastructural demand -Tata Tubes

Tata Steel – a major tube-maker in India, has a production capacity of 1.2 million tonnes in the segment of ERW Tubes. The market size of pipes and tubes in India is 10% of the total steel consumption with a per capita tubes consumption of 10 kgs in FY20. Whereas, the global per capita consumption is 21-22 kgs.

In a recent webinar conducted by SteelMint on Indian pipes and tubes industry, Mr. Ujjal Chakraborti. Executive-In-Charge, Tata Steel Ltd. (Tubes) highlighted the future demand drivers for the pipes industry.

Key takeaways from the Webinar are mentioned below:

• Govt. plans to open 100 airports by 2025 with an investment of INR 1 trillion
  Investment of 50 lakh crore into railways by 2030
• Redevelopment of 400 stations through PPP route & 4 new dedicated freight corridors
• Planned investment of INR 3.6 lakh crore by 2024 in Water Pipeline
• Urban Infra Development programs (Smart City, AMRUT, HRIDAY etc.)
• Growing vertical mode of development – increased spending on skyscrapers
• Rapid urbanization – development of G+20 structures, green building norms & rural housing schemes- Pradhan Mantri Gramin Awaas Yojana (PMAY-G)
• Increased demand for HVAC system due to awareness in firefighting parameter
• Expansion plans of 140 million metric tonnes per annum in the next 4-5 years in refineries
• In Oil & Gas, there is a thrust to increase the City Gas Distribution (CGD) networks thereby improving the infrastructure
• Shift towards higher strength & higher end applications due to various norms (Light weighting)
• Per capita consumption of 2/4 wheelers is very low – Potential for demand growth
• Medium Heavy Commercial Vehicles (MHCV) demand proportional to Infrastructural/Industrial growth. Two wheelers growth to ride on rural demand

SteelMint’s Analysis:

Owing to good monsoon and improving rural economy there has been a revival in domestic demand in the quarter gone by. The COVID-19 outbreak in India, followed by the national lockdown, impacted the steel industry severely causing disruptions in the supply chain and thereby impacting demand as well as production.

While the auto recovery has been led by the demand for tractors and motorcycles, the passenger car business picked up as well. The other area where we see demand for pipes and tubes is the expected government spending in the oil and gas sector, water conveyance systems and railways. Construction is still a bit slow but the monsoon quarter has traditionally been the weakest quarter for construction.