Indian API pipe makers find the going tough as import offers rise

Indian steel pipe manufacturers are still deferring import procurement of API grade hot-rolled coils (HRCs) and plates, on expectations that global prices may correct in a few months. Currently, prices are exorbitant, making it difficult for buyers to import.

Current offers from South Korea for X70 grade API HRCs stand at around $1,100-1,150/tonne (t) CFR Kandla and for X70 grade API HR plates at around $1,400/t CFR Kandla, SteelMint learnt from market participants.

Steel is the main raw material for manufacturing these pipes. Current steel import prices have spiked. Hence, Indian steel mills are resorting to the domestic market to fulfil their needs. Current offers from domestic suppliers are cheaper and thus more viable compared to the import offers for the API X70. Domestic offers are assessed at around INR 75,000-78,000/t ($1,008 -1,050/t).

"Given the good demand in the oil and gas segment, pipeline projects that can consume 10,000-20,000 t of API pipes have been lined up for reverse auctions (lowest bidder to be declared. These are to be finalised by next week," said a reliable market source.

In China, lack of clarity in export tax announcements, increased marine freight rates and logistical disruptions due to Covid-19 have sent both buyers and sellers to the side-lines. Moreover, production cuts led to limited allocations for exports.

Therefore, the shortage in steel supplies for various pipeline projects which were mainly dependent on raw material from China has put API pipe projects on hold. Owing to cash flow constraints, surge in steel prices, and tight steel allocations globally, the pipe projects did not move ahead, SteelMint understands from market sources.

Way ahead

India's shift to cleaner and greener energy sources is likely to fuel the API pipes market growth. As per sources, the government is also planning to switch to transportation of ethanol via pipelines. For this, they are also in talks with pipeline manufacturers for building dedicated bio-fuel pipelines.

The Ministry of Petroleum and Natural Gas has also held meetings with Indian Oil Corporation (IOC) to transport ethanol via pipelines from its refineries. In fact, it is looking to soon start the transportation from IOC's Barauni refinery in Bihar. However, high production cost is one of the major bottlenecks that the companies are facing in the present scenario.