APL Apollo Tubes Limited, India’s largest structural steel tubes manufacturer, APL Apollo Tubes Limited, on 11 May ’21 has announced, a second price hike in the month of May ’21, of INR 2,500/tonne (t) ($34/t) on the list price of its coil-based pipes on 11th of May ’21 .The price hike was on account of an uptick in hot-rolled Coil prices and limited supply, according to the latest information shared by the company with SteelMint.
The current trade offer as of week 20 of CY ’21 for base grade ERW pipes(25-125 NB, 2.2-6 mm thickness) is assessed at INR 70,000/t(exy-Delhi),INR 71,250/t(exy-Mumbai),and INR 69,000/t(exy-Raipur). Prices remain unchanged since last week and do not include GST @ 18%.
A pipe distributor from Mumbai stated, “The major pipe mill is planning to announce another price hike by around INR 2,500/t on 21st of May, considering the upside in flat steel prices and limited raw material supply.”
Why are ERW pipes prices moving northward?
HRC prices remains elevated on strong global demand. SteelMint’s benchmark price for 2.5mm thickness hot-rolled coils(HRC) stands at INR 66,000-67,000/t(exy-Mumbai). The prices mentioned do not include GST @18%.
Amid a demand surge in the global markets, Indian steel companies are expected to accelerate the pace of debt reduction in the coming quarters which would result in an increase in HRC prices.
The domestic demand scenario for ERW pipes continues to remain sluggish as Covid disrupts housing sector recovery.
The onset of the second wave of the pandemic has influenced the future sentiments of real estate stakeholders in the country.The Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index(January-March, 2021) survey saw a decline in the future sentiment score to 57 from 65 in the December quarter owing to uncertainties resulting from the spread of a second wave of Covid-19 infections.A recent report by Anarock Property Consultants indicates that the second Covid-19 wave, coupled with the expiry of the stamp duty cut period, impacted the monthly growth momentum of Mumbai’s housing sector.
In Delhi, where a sharp surge in Covid-19 cases has brought economic activity to a standstill, the real estate developers are struggling as well.
On the macro-economic front, the pace of economic revival appears to have slowed down, with some economic indicators showing a weakening over the last two months. Influenced by the change in macro-economic developments, stakeholder outlook on the overall economic momentum and on credit availability has turned cautious in Q1 2021.
Near-term outlook-
The steel pipes and tubes sector has seen a strong growth in the last few quarters on the back of steady growth in the housing industry. With the central government refraining from a nationwide lockdown, the sector is hoping to hold on to the progress made so far although the demand remains subdued.
The speed at which the inoculation drive is conducted and the intensity with which of local restrictions are put in is placed will be proportional to the growth of the housing sector and allied industries in the coming months.
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