Indian pipe manufacturers hold API import orders amid market uncertainty

Indian steel pipe manufacturers are holding their import orders for API grade HRCs since they feel the present prices are too high. They expect these import prices to cool down in the near future and only then will they firm up their import plans, SteelMint understands.

Consequently, these pipe makers held discussions with the government seeking extension of the deadline for projects where these pipes find application by 2-3 months. These producers are slowly recovering from the devastating effect of the second wave of the pandemic. Plants were running at low capacity utilisation during Apr-Jun '21 and are thus behind delivery schedules and hence the plea for deadline extensions.

Import prices

Where imports are concerned, China and Korea are the major suppliers of API grade HRCs. Parcels of 20,000-30,000 tonnes (t) are generally sourced on a monthly basis by these pipe manufacturers. Currently, the offers from Korea for X70 grade API HRC(7.14mm to 12mm)?stand at $1,100/t CFR.

There are no offers from China at the moment and there is added uncertainty in terms of the export duty. These factors have led Indian pipe manufacturers to put the imports on hold.

Owing to the uncertainty in the market, steel pipe makers are now ordering API HRCs short-term for 2-3 months instead of opting for the previous long-term buying contracts.

Indian pipe mills enjoy 40-50% share of the imports pie of API grade HRCs because domestic production is not able to fulfil their requirements.

API grade pipes market

The size of the API HRC market in India is 1.2-1.4 million tonnes (mn t) per annum, including both domestic and overseas orders.

These pipes find usages across following areas:

• Cross-country pipelines: These are large diameter pipes (X65, X70).
  
  
• City gas distribution: These are X42 and X52 grades (up to 12-inch diameter) made through the ERW route.
  
  
• Export orders: These include supplies to Latin America and the Middle East.
  
  

Key players bag orders

The leading Indian steel pipe manufacturer, Ratnamani Metals and Tubes, had bagged a domestic order worth INR 594 crore for supply of coated carbon steel pipes to Numaligarh Refinery as part of the Paradip Numaligarh Crude Oil Pipeline Project, which is to be executed within 15 months. This project is under execution and is expected to be completed by May-Jun '22.

The largest domestic CCP order in the second half of FY '21 was for the Numaligarh Refinery Paradip (NRL) project, amounting to around 200,000 t of X70 grade (9.2-15.9 mm) material. About 75% of the order, comprising X70 API (9.2mm) is to be sourced from the domestic market and the remaining 25% from overseas. The domestic players include Ratnamani (55,000 t), Jindal SAW (26,000 t), Welspun Corp (18,500 t), Surya Roshni (26,000 t), MAN Industries (55,000 t) and AM/NS India (20,000 t).

Outlook

Going forward, the Indian pipe producers are anticipating softening in the import prices of API grade HRCs in the upcoming weeks.