India: Major ERW pipes producer eyes further INR 1,000/t price hike in Oct

Distributors are quite confident that the electric resistance welded (ERW) pipes segment could see a price hike of around INR 1,000/tonne (t) in the second week of Oct'21 on account of an increase in the prices of hot-rolled coils (HRCs) and rising demand in the housing sector in the upcoming festive season.

A leading structural steel tubes manufacturer is planning to hike pipes prices owing to an expected rise in HRC prices."Pipes prices are expected to increase by INR 1,000/t on 10 Oct'21 and there might be another hike of INR 2,000/t in the next month,"said a Mumbai-based distributor.

Current trade offers for base grade ERW pipes (25-125 NB, 2.2-6 mm thickness) are assessed at INR 71,000/t exy-Delhi, at INR 71,250/t exy-Pune and at INR 69,000/t exy-Raipur. Prices do not include GST @ 18%.

At present, Tata Tubes is reported to be booking coil-based pipes at INR 72,000/t ($961/t), ex-Jharkhand, for October deliveries, compared to the last revised price in September which stood at INR 70,000-70,200/t ($943-945/t), ex-Jharkhand. Prices do not include GST at 18%.

HRC prices up amid restocking

Domestic HRC trade reference prices witness a spike of around INR 2,500/t in Mumbai. SteelMint's benchmark price assessment for 2.5-8 mm IS 2062 HRC stands at around INR 67,500-68,000/t (exy-Mumbai). The prices mentioned exclude GST at 18%.

Mills raised prices by around INR 1,500/t for Oct'21. An increase in restocking towards the end of last week has led to this spike in prices.

Improved real estate demand driving ERW pipes sales

Housing and office space demand is likely to improve going forward in the festive season. Improved housing demand driven by low mortgage rates has contributed to the increase in sales, according to Knight Frank India. For instance, Oberoi Realty, one of the leading real estate developers in Mumbai, during the April-September period, sold 239 units as against 50 in the year-ago period.

As per data available from the government's Department of Registration and Stamps, Sept'21 witnessed 7,799 properties being registered in Mumbai, up 15% from the previous month of August which saw sales of 6,784 units.

Real estate developers anticipate the pace of both sales and property launches to improve further in the upcoming festive season.

Way ahead

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