India: ERW pipes prices may reduce by INR 2,000-2,500/t in Sept'21

India's leading electric-resistance-welded (ERW) pipe producers are likely to decrease list prices by INR 2,000-2,500/tonne ($27-34/t) in Sept'21 on account of subdued domestic demand and decline in hot-rolled coil (HRC) prices.

A pipes distributor from Mumbai told SteelMint,"A leading structural steel tubes manufacturer is likely to announce a first price decline of around INR 2,000/t ($27/t) after 10 Sept'21. On the other hand, the pipe maker is offering INR 2,000/t discount to some traders in order to boost sales. However, market sentiments remain bearish in the trade segment."

"Buyers have become very price sensitive in procuring material on anticipation of a further decline in raw material prices in the coming weeks. Currently, demand for ERW pipes continues to be slow in the domestic market," he added.

A Tata Tubes distributor based in Delhi said, "ERW pipe distributors continue to feel the pressure of buying material from the mills in the absence of a healthy demand. Furthermore, poor pipe sales have affected its consumption in the market owing to low buying intent in the trade segment. The dealers are awaiting a fall in pipe prices this month."

At present, Tata Tubes is reported to be booking coil-based pipes at INR 71,000/t ($954/t), ex-Jharkhand, for August deliveries, compared to the last revised price in early-August which stood at INR 70,000/t ($940). Prices do not include GST at 18%.

Current trade offers for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 70,000/t (exy-Delhi), INR 70,250/t (exy-Pune) and INR 68,000/t (exy-Raipur). Prices do not include GST @ 18%.

HRC trade prices drop further

Domestic prices for hot-rolled coils (HRC) declined this week in key regions due to a fall in raw material prices, drop in HRC export offers and low demand in the domestic market. The market lacks active participation as the stakeholders await price announcements by mills for September.

SteelMint's benchmark price assessments of (2.5-8 mm IS 2062) HRC fell by around INR 800/t to around INR 65,000-66,000/t (exy-Mumbai), exclusive of GST @18%.

Lower impact of second wave of Covid on residential realty sales

Sales in the residential real estate sector across the top eight cities of the country in Q1FY'22 dropped by 19% q-o-q to 68.5 million sq ft from 84.7 million sq ft in Q4FY'21 due to the resurgence of the second wave of the pandemic. However, recovery in sales in this sector is likely to be in the latter part of FY'22 which may rebound to the earlier levels in the short-to-medium term.

The impact of the second wave on this business has been lower than that witnessed in the first wave due to various factors such as continuing work-from-home and localised lockdown restrictions.

Way ahead

The underlying demand trend has been hit and prices have gone down. However, going forward, factors such as multi-year low interest rates, demand for more residential space on account of a shift to hybrid working model, and pent-up demand in the Indian housing segment may drive up ERW pipe sales in the domestic market.