India: ERW pipe distributors expecting price correction of INR 1,500-2,000/t

Electric resistance welded (ERW) pipes' traders are expecting a price revision in mid-and end-Nov'21 on the back of a sharp correction in domestic HRC prices.

The market is expecting a price correction of INR 1,500-2,000/tonne (t) ($20-27/t) following a sharp revision in HRC prices. Hence, distributors have temporarily halted restocking activities, SteelMint understands from reliable sources.

Current trade offers for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 75,000/t exy-Delhi, INR 75,250/t exy-Mumbai and INR 73,000/t exy-Raipur. Prices do not include GST @ 18%.

"Customers were busy purchasing pipes and tubes post-the price hike of INR 3,000/t ($40/t) on 1 Nov'21 as there was a buzz that prices may shoot up further. However, the order volumes are quite limited at present," said a Delhi-based Tata Tubes distributor.

At present, Tata Tubes is reported to be booking coil-based pipes at INR 76,000/t ($1,019/t), ex-Jharkhand, for November deliveries, compared to the last revised price in October which stood at INR 73,000-74,300/t ($976-994/t), ex-Jharkhand. Prices do not include GST at 18%.

Will HRC prices correct sharply?

The buzz in the market is that there may be a correction in domestic hot rolled coil (HRC) prices in India as overseas markets are observing a sharp fall in price levels. However, at present, the opportunity of imports volumes rising is limited as no trader would be keen to take such a long position on deliveries. A few mills are likely to undergo maintenance in December which may result in production loss and support the firm prices.

However, if international prices continue to fall then the scenario may change, another source observed, adding, "Currently, this looks to be the inflexion point."

Way ahead

Even if prices head south, HRC prices may not observe a "steep correction", said a source from a leading steel mill. A reliable source from a leading ERW pipes manufacturer said they are "closely monitoring the situation" as the market reactivates post-Diwali holidays. A correction in the near term may happen but the quantum cannot be ascertained at present.