Strong demand for API (American Petroleum Institute-benchmarked)-grade pipes is driving Indian end-buyers to make domestic purchases instead of imports. This trend has been continuing for quite a few months now.
Why are buyers resorting to domestic purchases?
- This trend is sustaining because the landed cost of import offers of X-70 API-grade hot rolled coils (HRCs) are higher compared to domestic prices. For instance, the import prices of this material from South Korea are currently at $1,055/tonne (t) CFR Kandla (approx. INR 79,125/t). On the other hand, domestic market prices of HRCs are ranging from INR 76,000-78,000/t FoR Kandla for Dec’21-Jan’22 shipments.
- China, which also habitually offers this grade, is absent from the market for the time being because of two factors: One, mills are in the throes of meeting year-end production cut targets. Two, there is still a lack of clarity on the long-awaited export tax announcement. Indicative offers of X-70 API plates from China are at around $1,100/t CFR (approx. INR 82,500/t), as per sources.
- Where X-70 API grade plates are concerned, there are no import offers from South Korea because mills in this country do not have export allocations for India at this juncture since they are busy fulfilling previous bookings.
- Japanese mills have not been very active in the API-grade plates export market since domestic and global ship-building demand is very high at present, forcing mills to divert most of their inventory to this segment. That apart, several blast furnaces mills have gone into maintenance mode. Consequently, there are no recent inquiries from the Indian for Japanese plate offers. However, indicative offers are hovering at $1,350/t CFR basis (approx. INR 1,01,250/t). In any case, Japanese mills generally offer special grades of X-70 API plates for niche projects, which are habitually much costlier.
Domestic demand
It is heard there is demand for 100,000 tonnes of X-70 API-grade HRCs from Numaligarh Refinery in Assam. The reverse auction for this deal will commence from the first week of Jan’22.
A tender has also been floated for X-70 API-grade HRCs from Indian Oil Corporation Limited (IOCL) for 3.5 lakh tonnes.
That apart, Welspun Corp, one of India’s leading welded line pipes makers, has received multiple fresh export orders of around 120 kilo metric tonnes (kmt), amounting to INR 1,400 crore. Additionally, it has received an order for a 59-kmt deep offshore pipeline project located in the Gulf of Mexico. These deals are keeping Welspun’s demand for X-70 API-grade HRCs strong.
Near term outlook
Domestic projects being awarded by the GOI are likely to keep the demand for API grade HRCs and plates sustained till next quarter. The projects awarded are also likely to bring limited volumes of imports in the near term.
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