Leading ERW pipe manufacturers are likely to raise list price by INR 1,500-2,000/t on the back of rising cost of hot-rolled coils.
A pipe distributor from Raipur told SteelMint: “APL Apollo Tubes is likely to announce another price hike of around INR 1,500/t ($21) during the third week of June. However, demand is likely to remain subdued and recovery is slow. The attitude of the buyers has become very price sensitive.”
“The mill is planning to raise list prices by INR 1,500-2,000/t($21-27)during the third week of this month. It will increase pipe prices on account of rising costs of pipe-making raw material, which is hot-rolled coil (HRC), ” aTata Tubes distributor based in Delhi informed.
At present, Tata Tubes is reported to be booking coil-based pipes at INR 74,000/t ($1,013), ex-Jharkhand, for June deliveries, compared to the last revised price in May which stood at INR 71,500/t($979). Prices do not include GST at 18%.
The current trade offers for base grade ERW pipes(25-125 NB, 2.2-6 mm thickness) are assessed at INR 72,000/t(exy-Delhi), INR 72,250/t(exy-Pune) and INR 70,000/t(exy-Raipur). Prices do not include GST @ 18%.
HRC prices remain stable
SteelMint’s benchmark prices for 2.5mm (HRC) stands at INR 66,500-67,500/t (exy-Mumbai) compared to last week. On the other hand, major steelmakers are offering HRC at INR 70,000-70,500/t (exy-Mumbai). Thus, the gap between offers and actual price is INR 3,500/t, which has resulted in limited trade.
Indian mills are likely to hike prices in the near-term on the back of higher export premiums, and a gradual revival in steel demand. However, it would be difficult to absorb further hikes in the current scenario because of poor sales in the trader’s market amidst regional lockdowns.
Real estate developers expecting gradual recovery
Once the second wave of Covid-19 wears down, the real estate developers are anticipating a gradual recovery, owing to pent up demand.Total property registrations in Mumbai stood at 5,360 deals in May, down 47% from the previous month and 15% lower than May ’19, according to Knight Frank India. The sluggish housing sector is also dampening the overall sentiment of ERW pipe distributors.
On 7 Jun ’21, APL Apollo Tubes had raised pipe prices by INR 2,000/t ($21-27); however, sources reported to SteelMint that the Raipur and Mumbai markets couldn’t absorb the hike owing to sluggish demand and liquidity crisis in the domestic market.
The distributors could only manage to liquidate the stocks at a premium of INR 1,000($14). Meanwhile, the Delhi, Bangalore and Hyderabad regions were able to absorb the price hike of 2,000/t, SteelMint learnt from sources.
Outlook
Construction activity is expected to stabilise gradually in the coming months, and residential launches are likely to pick momentum with developers continuing to attract home buyers with various incentives, thereby resulting in improved demand for ERW pipes. However, the recovery at present seems quite modest, as most buyers are spending cautiously.
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