India: Pipe makers prefer domestic API grade HRCs, plates on steep China offers

Indian buyers are showing interest in domestic mills for API grade HRCs and plates as the China market is silent.

Given the strong demand in China’s home market, and the export rebate cuts with the intention to keep steel capacities under check, the country does not have excess steel volumes to divert to export markets at present.

Moreover, Chinese mills are yet to bring down their export offers. Presently, they are offering API X70 plates at $1,350/tonne (t) CFR to India.

Hence, the Indian buyers are finding it tough to import API grade HRCs and plates from China owing to the import prices, increased freight costs and surcharge.

The Indian importers are in no hurry to book China-origin hot rolled coils (HRCs) as they expect Chinese prices to fall further in the next few weeks.

Indian importers hold back HRC bookings in hope of lower prices:-

Indian API manufacturers had lost their competitive edge at the lower end of the spectrum to countries like China, largely on account of higher costs of manufacturing APIs in India.

Due to the prices offered by Chinese suppliers, in the last few months, the Indian API industry has been dependent on Korea and Japan for imports of APIs and advanced API intermediates.

Currently, countries such as Korea and Japan are offering API X70 grade plates to India at around $1,350/t CFR and $1,400/t CFR respectively.

India is likely to witness an operational commencement of 647 oil and gas projects during the period 2021-2025, accounting for 33% of the total upcoming projects in the Asia-Pacific (APAC) region, according to GlobalData.

In the mid-stream sector, the pipeline segment alone constitutes 47% of all projects. India’s focus is on development of natural gas pipelines with the Jagdishpur-Haldia phase II being one of the key projects with a length of 1,900 km and costing US$1.4 billion. The pipeline is presently in construction stage and is expected to start operations in 2022.

Outlook-
Indian importers are hopeful of lower offers of API HRC and plates for July-August shipments.