India: Major ERW pipes maker planning INR 1,000-2,000/t ($13-27/t) price hike in Nov

The electric resistance welded (ERW) pipes segment could see yet another price hike of around INR 1,000-2,000/tonne (t) ($13-27/t) in the first week of Nov'21, traders informed SteelMint. A major ERW pipes manufacturer is thinking along such lines, it was learnt.

The hike would be on account of an increase in the prices of hot-rolled coils (HRCs) and rising demand in the real estate sector in the upcoming festive season.

A leading structural steel tubes manufacturer had announced three price hikes this month. It raised pipes prices in quick succession by INR 1,000/t on 11 Oct'21, by another INR 1,000/t on 18 Oct'21 and then another INR 1,000/t on 25 Oct'21 owing to a hike in HRC prices. "Pipes prices are expected to increase by INR 1,000-1,500/t in the first week of Nov'21 depending upon the hike in raw material prices and material shortage,"SteelMint learned from a Delhi-based distributor.

Current trade offers for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 74,000/t exy-Delhi, at INR 74,250/t exy-Pune and at INR 72,000/t exy-Raipur. Prices do not include GST @ 18%.

"The prices of tubes may increase by INR 2,000/t in the first week of November. Hence, customers are busy purchasing pipes and tubes currently before the next price hike is announced," said a Tata Tubes distributor.

At present, Tata Tubes is reported to be booking coil-based pipes at INR 73,000-74,300/t ($976-994/t), ex-Jharkhand, for October deliveries, compared to the last revised price in early October which stood at INR 72,000/t ($961/t), ex-Jharkhand. Prices do not include GST at 18%.

HRC trade prices decline

HRC prices edged down this week due to the temporary lull in market activities ahead of the Diwali festival.

SteelMint's benchmark trade reference price assessment for hot rolled coils (HRCs) (IS 2062,2.5-8 mm) stands at around INR 71,000-72,000/t (exy-Mumbai). Prices mentioned are exclusive of GST @18%.

However, the mills are likely to increase the list prices of HRCs for Nov'21 deliveries while trade channels feel it may be difficult for the market to absorb another steep price hike.

Home registrations jump in the festive period

The daily average of home registrations has jumped in the festive period without the stamp-duty incentive support. Low policy interest rates and developers giving attractive offers are the major factors for the sales trajectory to pick up again.

Record-low home loan rates and lucrative festive-season offers from realtors have helped drive sales through the auspicious period that began early October. Mumbai recorded 3,205 cumulative registrations during this period. More than 400 apartments were registered daily through the Navratri period in Mumbai despite an end to attractive stamp-duty rebates which were applicable earlier. Whereas, the registrations in August and September were 219 and 260 units, respectively, according to Knight Frank India.

Diwali sales are also anticipated to be robust. The housing sector is expected to benefit from upbeat homebuyer sentiments and these factors are expected to contribute to the sales momentum through Diwali in Mumbai.

Way Ahead

Given the current market scenario, domestic HRC trade prices are likely to increase, supported by rising demand, SteelMint learned from market sources. Thus, ERW pipes prices are likely to increase in the near term on account of surging raw material prices and domestic demand