India’s leading electric resistance-welded (ERW) pipe manufacturer, headquartered in western-India, recently announced price correction of INR 1,000/tonne (t) on 15 Sept’21 in order to boost sales in the domestic market.
Current trade offers for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 69,000/t (exy-Delhi), INR 69,250/t (exy-Pune) and INR 67,000/t (exy-Raipur). Prices do not include GST @ 18%.
“The ERW pipes market has been impacted by low buying interest and liquidity crunch. The correction in the price levels is likely to give some relief to the distributors,” a Delhi-based distributor informed SteelMint.
At present, Tata Tubes is reportedly booking coil-based pipes at INR 71,000/t ($954/t) ex-Jharkhand for September deliveries compared to the last revised price in August which stood at INR 70,000/t ($940/t). Prices do not include GST at 18%.
Major factors keeping ERW pipes prices under pressure
1.HRC prices under pressure: Persistent weakness in downstream industries has kept trade subdued in the domestic market, keeping the prices of hot-rolled coils (HRCs) under pressure. Secondly, there is persistent low buying interest from established import markets such as Vietnam, Europe, the UAE and others. Thirdly, HRC export trade from India has come down due to rising concerns on vessels and container availability.
SteelMint’s benchmark price assessment for 2.5-8 mm IS 2062 HRCs stands unchanged at around INR 65,000-66,000/t (exy-Mumbai). The prices mentioned exclude GST @18%.
2.Sluggish demand in housing sector: Property registrations in Mumbai, the country’s biggest real estate market, for the month of Aug’21 declined 32% over Jul’21, according to data from the Inspector General of Registration, Maharashtra.
3.Restocking activities slow: Distributors are holding sufficient materials in hand because of sluggishness in end-user demand. “Slow demand since the beginning of the second wave has led to stagnation of inventory. Hence, most distributors are delaying their restocking activities,” a reliable Mumbai-based source told SteelMint.
Way ahead
ERW pipe distributors are awaiting a further reduction of INR 1,000/t in prices at the end of this month on the back of sluggish demand and reduction in HRC prices, a Mumbai-based Tata Tubes trader said. It would be interesting to see the strategy pipe manufacturers adopt so as to ensure liquidation of material in the market.
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