Indian steel pipe manufacturers have been holding back from procuring API grade HRCs and plates, waiting for the global prices to soften. Buyers are still unable to import at the current prices which are very high.
The current offers from Korea for X70 grade API HRCs stand at around $1,100/t CFR Kandla and that for X70 grade API HR plates stand at around $1,250-1,275/t CFR Kandla, SteelMint understands from market sources. The current import offers being high, Indian steel mills are resorting to the domestic market to fulfil their needs. The current offers from domestic suppliers are cheaper and viable compared to the import offers for the API X70 grade HRC. Domestic offers are assessed at around INR 75,000-77,000/t ($1,008 -1,035).
However, SteelMint understands from market participants that the pipe projects have been on hold and did not move owing to cash flow constraints, surge in steel prices, and tight steel allocations globally.
Recently, leading pipe producers in India made most of the domestic bookings of API HRCs from Tata Steel and AMNS for the Numaligarh Refinery Limited (NRL) project at price levels much below INR 80,000/t.
“Given the good demand in the oil and gas sector, bidding is ongoing, and finalisation will take about 2-3 months for projects for this financial year. Pipe manufacturers are expecting 100,000-200,000 t of orders to be awarded in the next quarter,” said a credible market source.
Project finalisation taking time
Enquiries have not dried up but project finalisation is taking time for the following reasons:
1. There has been a spike in prices of steel, the main raw material for the pipelines. Steel comprises almost 80% of the pipes’ costs at times.
2. Project costs have been impacted heavily and all previous final investment decisions(FIDs) of projects are under re-evaluation.
3. Additionally, absence of steel from China for exports has impacted supply chains due to shortage of steel supplies for various projects which were mainly dependent on raw material from China.
4. Japanese mills are also closing down their capacities due to cost-versus-realisation.
5. European mills striving for material. So, exports of API grade steel are quite marginal from Europe.
6. In India, many projects have been delayed owing to paucity of funds, post-pandemic.
7. Furthermore, majority of the nations worldwide are committed to the Green Earth movement and reducing emissions to achieve carbon neutrality. Hence, big oil and gas players are working hard on green fuels and making their respective pipelines and structures more environment-friendly. This will augur well and lead to major revolution in the steel industry in the coming years and we may see different specifications and requirements for pipeline steel.
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