India’s largest ERW pipe manufacturer, APL Apollo, has announced a correction in its prices by INR 2,000/tonne (t) ($27), effective from today on account of dwindling sales, SteelMint understands from credible market source.
SteelMint had reported earlier that Raipur and Pune markets were not being able to absorb the consistent rise in pipes prices owing to sluggish demand and liquidity crisis in the domestic market. The distributors could only manage to liquidate stocks at a premium of INR 1,000 ($14).
The current trade offers as of week 25 of CY ’21 for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 70,000/tonne (exy-Delhi), INR 70,250/t (exy-Mumbai) and INR 70,000/t (exy-Raipur). Prices have declined since last week and do not include GST @ 18%.
A pipe distributor from Mumbai said, “APL Apollo Tubes couldn’t announce any further price hikes during June as the market was not able to absorb any surge in pipe prices. The trade market continues to remain dull and quiet. Nobody is ready to procure the material at a high price.”
However, Tata Tubes is likely to keep its prices unchanged at the moment, SteelMint learnt from market sources.
“The mill had raised pipe prices by INR 2,500/tonne ($34) on 10 June ’21. It is unlikely the pipe manufacturer will further increase prices this month, despite costlier pipe-making raw materials (hot-rolled coils). Prices remain stable owing to slump in demand and limited sales in the domestic market,” said a Tata Tubes distributor based in Delhi.
At present, Tata Tubes is reported to be booking coil-based pipes at INR 74,000/t ($998), ex-Jharkhand for June ’21 deliveries, compared to the last revised price in May ’21 at INR 69,500/t ($952). Prices do not include GST @ 18%.
Domestic HRC prices have softened
This week, SteelMint’s benchmark prices for 2.5mm hot-rolled coils (HRCs) stand moderate at INR 66,500-67,500/t(exy-Mumbai) against last week. On the other hand, major steelmakers are offering HRCs at INR 70,000-70,500/t(exy-Mumbai). Prices mentioned do not include GST @18%.
Thus, the gap between offers and actual prices is INR 2,500-3,000/t, resulting in limited trade. Normally, trade and mill prices are at par or trade prices are higher by INR 1,000/t over mill prices. However,mills are less likely to correct prices in the near-term, despite sluggish trade in the domestic market on higher steel prices.
Sluggish demand leading to price correction
India’s housing market has taken a big blow on account of the second wave of Covid-19. Sales have been impacted in both urban and rural markets.The country’s most valuable real estate market, Mumbai, witnessed a slowdown in housing sales in May, with only 29% of property registrations from new residential sales concluded during the month, according to Knight Frank India. Total property registrations in Mumbai stood at 5,360 deals last month.
“In the last couple of months, we have seen a steep downward trend in enquiries and sales, hampering not just the steady progress made by real estate, but also the 250-plus ancillary industries, which come into play due to the industry’s strong multiplier effect,”said Deepak Goradia, President, CREDAI-Maharashtra Chamber of Housing Industry (MCHI).
Way ahead
Housing demand can be further encouraged, if the government injects enough stimulants for the real estate sector. Only time will tell how the situation pans out for the housing sector, as consumers are investing their money very cautiously. Also, it would be interesting to see how the pipe manufacturers tweak their pricing strategy to ensure healthy performance in this sluggish market scenario.
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