Indian ERW pipe manufacturers are lining up for a substantial hike in pipe prices as steel prices touch unprecedented levels in Jan ’21. APL Apollo has already made the official price hike of INR 2,000/t ($27) that was announced today and others are likely to follow the suit, sources reported to SteelMint.
Effective trade prices:
- The offer by India’s leading ERW pipe-manufacturer, APL Apollo Tubes Limited, for base grade ERW pipes (25-125 NB, 2.2-8 mm thickness) is assessed at INR 61,750/t (exy-Mumbai), INR 59,500/t (exy-Raipur), and INR 61,500/t (exy-Delhi).
- Tata Tubes is reported to be booking coil-based pipes at INR 60,500/t (ex-Jharkhand) for January ’21, compared to the last revised price in Dec ’20 at INR 55,500/t.
- Prices do not include GST @18%.
Factors contributing to price hike of ERW Pipes:
Increase in HRC price: Indian steelmakers have increased the domestic flat steel prices due to tight supplies and robust demand. In Jan ’21, Tata Steel India increased HRC prices by INR 5,000/t. Effective prices of HRC stand at INR 56,000/t (exy-Mumbai). AM/NS India increased HRC by INR 2,250/t. The revised list prices stand at around INR 56,900/t for HRC (exy-Mumbai).SAIL raised HRC prices by INR 3,250/t to INR 55,000-55,250/t (exy-Mumbai) while JSW Steel increased HRC prices by INR 2,100/t to INR 53,500-54,000/t (exy-Mumbai).
Restricted supply: Major steel mills are pushing prices on tight supply since they are working with limited inventories. Thus, mills are unable to provide sufficient stocks to the trade sectors. “Mills are supplying only 30% of MoU quantities because of shortage”, shared a major stockist based in the Faridabad region. Few trade participants based in Chennai shared that supply constraints will continue till March because a major steel plant based in Vijaynagar is undergoing its expansion plans.
Recovery of real estate sector: Real estate across India’s top eight cities has become more affordable with property prices correcting and interest rates falling to multi-decade lows. Sales in the top eight cities increased 60% in the July-December 2020 period compared to the first half of last year. These cities recorded sales of 94,997 units, according to the latest findings of Knight Frank India.
Demand from agricultural sector: ERW Pipes and tubes are likely to witness a significant demand from agricultural sector owing to favorable factors like, 15% better than normal monsoon, increased availability of water in reservoirs for irrigation, increase in sowing acreage area of Kharif crop.
Outlook
A pipe distributor from Hyderabad stated, “Major Indian pipe mills are planning to announce another price hike by around INR 2,000/t in the third week of Jan ’21, considering the upside in raw material prices and limited supply.” He also stated that the “buyers are very cautious” and are closely monitoring the situation.
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