There is limited demand in the market for imported X70 API grade hot rolled coils (HRCs) and plates.
Import offers
Current offers from China for X70 grade API HRCs stand at $1,000/tonne (t) CFR Kandla for Dec’21 shipments. Also, latest offers from Korea for X70 grade API HRCs stands at $1,000/t CFR Kandla.
“These high prices are not workable for Indian pipe manufacturers trade. Moreover, these prices won’t be viable as India has 7.5% duty on Chinese imports,” a trader said.
There are also no recent export allocations from China, Korea and Japan for X70 API plates.
In China, there is still lack of clarity on an expected export tax announcement. Further, increased marine freight rates and logistical disruptions due to Covid-19 have led to production cuts across mills. There is no current allocation for India, as reported by sources.
Offers from the domestic suppliers are cheaper and thus more viable compared to import offers for the API X70. Domestic offers for API X70 HRC are assessed at around INR 79,000-80,000/t ($1,064-1,077/t).
Why is the API imports market dull?
1.China: Earlier, China was not offering due to production cuts. Currently, the market is waiting for clarity on firm interest from the Chinese mills and realistic offers.
Payment arrangement from China to India is a constraint at the moment.
However, Chinese mills are heard to be showing interest in exports of API again but prices may not be realistic for now and would be just to test the market. “Chinese mills are not fully active owing to dull domestic demand and are expected to be active again in the next 10-15 days,” market participants told SteelMint.
2.Japan: Japanese mills refrain from doing general projects where Korean and Chinese mills are quite competitive. They only offer special material for specific projects that command high prices.
Moreover, Japanese mills have not been very active in the API market owing to shipbuilding demand, shutting down of blast furnaces and limited demand.
SteelMint understands that currently some Indian pipe producers are in discussion with Japanese mills for few such enquiries and they will become more active in the market once the pipe orders get finalised.
3.Korea: Korean mills have recently booked some cargoes and seem to be full for now in terms of orders. The upcoming plant maintenance shutdowns are expected to further reduce capacities and allocation.
Reverse auctions (RA) for GAIL, IOCL and IGGL projects were concluded for X70 API pipes in end-Oct-early-Nov. At present, pipe makers are waiting for all the orders to be awarded. MAN Industries being the main beneficiary, has bagged major quantity of about 40,000 t while, 30,000 t has been awarded to Megaplast, 16,500 t to Asian Tubes and 20,000 t to Ratnamani Metals and Tubes.
Outlook
Going forward, the Indian pipe manufacturers are anticipating prices of API grade HRCs in the domestic market to be stable in the near term. Meanwhile, pipe producers are uncertain about import offers of API grade HRCs.
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