HRC based ERW pipes trade prices went down by INR 2,000/tonne (t) ($27/t) backed by a correction in HRC prices and subdued 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 70,000/t ($933/t) exy-Delhi, at INR 69,250/t ($923/t) exy-Pune and at INR 68,000/t ($907/t) exy-Raipur. Prices mentioned above are exclusive of GST @ 18%.
At present, Tata Tubes is reported to be booking coil-based pipes at INR 70,750-71,000/t ($943-947/t), ex-Jharkhand, for end-Dec’21 deliveries. Prices do not include GST at 18%.
Trade channel check suggests that price revision is likely to take place for early Jan’22 dispatches. A major HRC based ERW pipe manufacturer is likely to correct list price by INR 1,500-2,000/t ($20-27/t) on the back of expected revision in HRC prices. Hence, distributors have “temporarily halted restocking activity”, SteelMint understands from reliable sources.
Reasons for price correction –
Steep correction in domestic HRC prices: A continual decline in domestic HRC prices has weighed on ERW pipe prices. Indian domestic trade prices of hot-rolled coils (HRC) slumped to a 6-month low on the back of a continual decline in export offers which are at a 9-month low and subdued domestic demand leading to rising inventories in the domestic market.
SteelMint’s benchmark HRC (IS 2062, 2.5-8mm) prices were assessed at INR 63,500-64,500/t ($847-860/t) exy-Mumbai. Prices mentioned above are exclusive of GST @ 18%.
Market participants anticipate that there may be a further correction in domestic HRC prices in India going forward as the global markets are witnessing a correction in price levels.
HRC based ERW pipes’ sales subdued: The gap between primary and secondary ERW pipe trade prices has reached an all-time high in Dec’21. For instance, in Raipur, the gap between HRC based and the patra based ERW pipes, which was around INR 13,500/t ($180/t) levels in Jan’21, has now reached around INR 21,500/t ($287/t) levels. This is a major cause for concern as buyers who were earlier buying primary material, are switching to patra based pipes to lower procurement costs. Asides from the above, distributors of HRC based ERW pipes have sufficient inventory with them and are a bit sceptical to book more material unless price levels soften further as they feel the current levels aren’t sustainable.
Near-term outlook
India’s leading structural steel tubes manufacturer, headquartered in Western India, is likely to announce a price reduction of around INR 1,500-2,000/t ($20-27/t) for early Jan’22 dispatches, sources informed SteelMint. Furthermore, if the HRC price levels remain under pressure, more corrections are likely to take place, a credible source informed SteelMint.
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