India: Major projects to boost API-grade pipe demand in Mar'22

Demand for API-grade pipes in India is expected to remain strong in Mar'22 with some mega projects in the pipeline. SteelMint learned from market sources, total demand for API pipes of around 407,000 tonnes (t) to be generated from the below mentioned projects in the near-future.

Projects to be awarded in March

IOCL project: New crude oil pipeline (with capacity of 17.5 mmt pa) from Mundra, Gujarat to Panipat, Haryana by Indian Oil Corporation Ltd. of approx. 245,000 t of API-grade pipes is the most awaited project by the domestic manufacturers. The tender for this project had floated during end-Dec'21.

The submission of bids is due on 18-19 Jan'22 provided the date is not extended. This will be followed by the reverse auction and then finally the project will be awarded in the first or second week of Mar'22.

This project will meet the enhanced crude oil requirement arising out of capacity expansion of Panipat Refinery from 15 mmt pa to 25 mm t pa. The project is expected to complete within 36 months and would be synchronised with the commissioning of Panipat Refinery expansion project.

NRL project: Numaligarh Refinery Limited (NRL), a public sector undertaking in Assam, is expanding its refining capacity from 3 mm t pa to 9 mm t pa. This project is expected to be completed by 2024.

The reverse auction for the second phase of NRL project for 95,000 t of API-X70-grade coated line pipes is expected to take place around end-Jan-early-Feb'22. The orders are to be awarded by Mar'22.

GAIL project: The Mumbai-Nagpur-Jharsuguda Pipeline Project by Gas Authority of India Ltd. of 67,000 t of API-X70-grade coated line pipes is to be awarded by early-March. Currently, submission of bids is due in the third week of this month.

CGD licences: Megha Engineering and Infrastructures Ltd (MEIL) bagged 15 licences to retail CNG to automobiles and piped cooking gas to households in the latest city gas bidding round. Adani Total Gas got 14 licences.

According to the results of the bid opening for the 11th round of city gas distribution (CGD) bidding, Indian Oil Corporation (IOC) stands to get licences for nine geographical areas, Bharat Petroleum Corporation Ltd (BPCL) to get six, Assam Gas Company to bag three and Dinesh Engineers Ltd to get four licenses.

Hindustan Petroleum Corporation Ltd (HPCL), GAIL Gas Ltd, Think Gas Distribution Pvt Ltd, IRM Energy Pvt Ltd, Indraprastha Gas Ltd and Sholagasco Pvt Ltd are to get one licence each.

Indian pipe mills prefer domestic API-grade HRCS, plates

• China has been inactive in the Indian market for quite sometime because (i) mills are focused to meet their year-end production cut targets (ii) there is still a lack of clarity on the long-awaited export tax announcement. Indicative offers of X70-API HRC from China are at around $1,1,00/tonne (t) CFR (approx. INR 81,825/t) and X-70 API plates are at around $1,100-1,150/t CFR (approx. INR 81,825-85,500/t), as per sources.
  
  

• South Korean mills do not have any export allocations for X70-API plates for India at this juncture since they are busy fulfilling previous bookings and catering to domestic shipbuilding demand. Indicative offers of X70-API plates from Korea are at around $1,150/t CFR (approx. INR 85,500/t) while X70-API HRC offers are at around $935-940/t CFR (approx. INR 69,540-69,923/t).
  
  

• Also, Japanese mills have not been very active in the API-grade plates export market since domestic and global ship-building demand is very high at present, forcing mills to divert most of their inventory to this segment. However, indicative offers for X70-API plates are hovering at around $1,300/t CFR basis (approx. INR 96,700/t). In any case, Japanese mills generally offer special grades of X-70 API plates for niche projects, which are much costlier.
  
  

Thus, the landed cost of import offers of X-70 API-grade hot rolled coils (HRCs) are higher compared to domestic prices. On the other hand, domestic prices of X70-API HRCs are ranging INR 72,000-74,000/t ($968-995/t) FoR Kandla and prices of X70-API plates stand at around INR 76,000-77,000/t ($1,022-1,035/t) FoR Kandla for Jan-Feb'22 shipments.

Outlook

Domestic projects to be awarded in Mar'22 are likely to keep demand for API grade HRCs and plates sustained in the next quarter.