APL Apollo Tubes Limited, India’s leading structural steel tubes manufacturer, is planning to announce a price hike of INR 2,000-3,000/t in the first week of June ’21 on rising costs of pipe-making raw material (hot-rolled coil) and limited supply, a source informed SteelMint.
The current trade offer for base grade electric resistance welded (ERW) pipes (25-125 NB, 2.2-6 mm thickness) is assessed at INR 70,000/t(exy-Delhi), INR 71,250/t(exy-Mumbai) and INR 69,000/t(exy-Raipur). Prices remain unchanged since last week and do not include GST at a rate of 18%.
A Raipur-based pipe distributor stated, “The major pipe mill(APL Apollo) is planning to announce another price hike by around INR 2,000-3,000/t on 1 June ’21 on the back of surging steel prices.”
Steel rally to push pipe prices to new highs
Indian steel mills are contemplating increasing HRC prices further by around INR 2,000-3,000/t($27-41) in the first week of June ’21. The price hike is meant to reduce the gap between international and domestic prices. However, the end-user industry has been badly hit due to limited sales in Apr-May ’21 owing to lockdowns in different parts of the country.
Highlighting the sustained rise in prices and its detrimental impact on the user industry, the Indian Pipe Manufacturers’ Association (IPMA) has sought government intervention to regulate steel prices which are trading at all-time highs.
In a letter to the Ministry of Steel, dated 20 May ’21, the IPMA stated, “Pipe manufacturers and MSMEs are struggling for a long time due to increased prices and shortage of steel in the domestic market. We had approached your (Steel Minister’s) office, requesting your kind intervention for regulating prices and imposing a temporary ban on steel exports.”
SteelMint’s benchmark 2.5mm HRC prices are at INR 65,000-66,000/t(exy-Mumbai) as domestic demand remains sluggish across major markets. The price mentioned is excluding 18% GST.
Sagging demand weighs on housing sales
Blame it on lockdown restrictions imposed by different states in the wake of the second wave of Covid-19 in the country, housing sales have registered a 60% month-on-month (m-o-m) decline and new launches have fallen by 53% in Apr ’21, according to a report by Edelweiss Research.
Property registrations have stopped amidst cash flow problems and reserve depletion among buyers. The scenario is likely to have deteriorated during May ’21. And even after unlock measures are announced in different states from June ’21 onwards, buyers will be extremely cautious about property investments. Housing sales are expected to gradually pick up only once the overall market sentiments improve.
Short-term outlook-
Sales of steel pipes and tubes could pick up at a slow pace in the coming months as many states are likely to continue lockdowns till mid-June ’21.
However, a gradual improvement is expected in the domestic real estate market in Q2 FY ’22 owing to low interest rates, government incentives for affordable housing and the rise in demand for self-owned homes.
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