Amid Inflation Where Does Indian Steel Pipes & Tubes Market Stand?

The steel pipes and tubes industry is one of the significant portions of the Indian Steel sector. It contributes around 8 per cent of India's steel utilisation. 

The Indian steel pipe market is estimated to be Rs 50,000-55,000 crore. In value terms, 50 per cent of the market is ERW pipes and 50 per cent stainless steel and SAW pipes.

Rajesh Mohata, CEO and Executive Director, JSL Lifestyle said, "Stainless steel’s robust features, such as its high durability, tolerance to high temperatures, and corrosion resistance, have permitted positive sales growth. The majority of the demand comes from HNIs, government colleges, medical colleges, hospitals, hotels, and traditional centres. The primary demand is for drinking water and RO pipes."

FY21, the total steel pipe industry grew two-digit over the last four years and was assessed to be Rs 60,000 crore. As per a report by Credit Analysis and Research (CARE), the worldwide steel pipe and tubes market is esteemed at USD 90 billion and is projected to develop at a CAGR of 4 per cent in the following three years while the domestic market will add to around 9 -10 per cent of the global utilisation.

Sandeep Bansal, MD, Swastik Pipes said, "Now India has emerged as top 3 manufacturing hubs in the world after Europe and Japan for manufacturing steel pipes and tubes. Due to factors such as low cost of production, better productivity and quality and geographical advantages along with rising demand."

Market during and post-Covid

The covid 19 pandemic caused an unexpected and sharp decrease in financial activity and steel utilisation even worldwide. The monthly production of steel pipes and tubes decline 70,000 tonne in April 2020, because of disruption in manufacturing activity due to the nationwide lockdown.

Mohata said, "In 2020, the Asia-Pacific region held the largest market share but the Covid 19 pandemic hampered the market, causing alterations in demand and consumption patterns. We have observed that following the pandemic, people are becoming more conscious of their health and are more aware of what goes into the environment and surroundings. Hence, steel industry also saw a downfall like other sectors".

Bansal said, "Just like many other industries even the steel industry witnessed a fall during the pandemic. We were faced with some challenges and saw the demand for GIMS steel tubes fall as low as 30 per cent for a while. Due to the lack of manpower, the production dispatches and consumption got affected and there was a visible decline. However, the decline was short-termed and the consequences couldn’t last long."

In FY22, the business operation gradually returned to normalcy with gradual relaxation in restrictions announce to curb the second wave of covid. Furthermore, the government's continuing effort to scale up vaccination, strengthen healthcare infrastructure, live with virus attitude and another economic measures to restore the economy back on the growth trajectory supported the growing consumption volume of steel pipes and tubes during YTD FY22. During 10M FY22, the country's consumption of steel pipes and tubes registered a 4 per cent YoY growth.

"Stainless steel pipes are increasingly becoming popular due to their durability and functionality. They are far less vulnerable to corrosion and chemical leaching as they don't absorb components of the materials around it, such as lead or copper. Stainless steel is a superior replacement for plastic plumbing and is steadily becoming the go-to choice for commercial, industrial, and residential real estate projects. We foresee 200 per cent growth this year", said Mohata.

"The steel industry recovered quickly from the pandemic and has been reaching new peaks. The demand and prices both have increased lately and the number of orders placed by the government of the country has been on a rise. The government played a great role in re-establishing and increasing the demand for steel pipes and other products by announcing various schemes and projects like Jal Shakti Abhiyaan, Nal Se Jal, AMRUT and Namami Gange programmes, Jal Jeevan Mission etc. There was a great push on the infrastructure growth including roads, railways etc", said Bansal.

Market during Inflation

It is noteworthy that steel carries a weightage of only 1.27 per cent under the manufactured products category in the WPI (Wholesale Price of India, April 2022) index. While the WPI of steel pipes and tubes FY22 is 129.4. This implies that there is a limited impact of steel and stainless steel prices on overall inflation in the country.

On this Mohata added, "While it is a growing market, the plumbing solutions market has a minor influence on overall inflation in the country due to its small market size. It is safe to say that there are no externalities on the sales side. Customers, as previously stated, are educating themselves and are willing to pay the premium for health, hygiene, and safety."