Pipes Market Struggles Amid High Inventory and Low Demand

Key Takeaways

• Pipe Price Decline: DI and ERW pipe prices at an all-time low, with 100mm K7 DI pipes priced between Rs 1340-1380 and ERW at Rs 58,000/mt.
• Weak Demand and Surplus Stock: Primary manufacturers face challenges clearing 30-40% of their stock due to low demand and high inventory.
• Strategic Procurement Opportunity: With key buyers like Railways and Coal India holding strong funds, contractors can secure materials at low prices.
• Jindal Saw Acquisition: Jindal Saw's share price surged after acquiring a 31.2% stake in ReNew Green Energy, aiming for reduced electricity costs.
• Tata Steel Expansion Plans: Tata Steel negotiates with NMDC and OMC to secure 50% of its future iron ore needs for its steel production expansion.

Pipes Price

• 100mm K7 DI Pipes: Rs 1340 and Rs 1380
• ERW : Rs 58000/mt (ex Raipur)

Pipes Demand & Supply

• The market is currently grappling with significant challenges. Primary manufacturers like Apollo, Tata, and Jindal, with manufacturing turnovers of up to 2.5 lakh mt, are struggling to clear 30-40% of their stock. This surplus has led manufacturers to accept orders at reduced prices. Both MS and DI pipe market prices are at an all-time low, reflecting weak demand and high inventory levels in the supply chain.
• Major buyers such as Railways, Coal India, and government PSUs remain fund-rich, presenting a potential opportunity for strategic procurement amidst the prevailing low-price environment.

Pipes News

• Jindal Saw shares rally over 7% after inking deal to acquire 31.2% stake in ReNew Green Energy. Jindal Saw shares rose 7.7% after acquiring up to 31.2% stake in ReNew Green MHH One, aiming for concessional electricity rates. The deal will make RGMHH an associate by May 2025.
• Tata Steel plans to increase its steel production capacity to 40 million TPA by 2030. The target will require 60 million mt of annual iron ore. The company is holding negotiations with the National Mineral Development Corporation (NMDC) and the Odisha Mining Corporation (OMC) to meet 50 percent of its iron ore needs in future.

Expert Opinion

• The market is currently experiencing a slowdown, with contractors awaiting fund disbursements from the government. Major contractors are facing significant payment issues, leading to halted procurements at sites and stalled projects.
• DI pipe prices have hit their lowest levels, presenting a unique opportunity. Contractors are strongly advised to book and reserve materials at the current prices to mitigate future cost fluctuations and ensure project readiness when the market stabilizes.