Pipe firms see spurt in exports

According to an estimate, a $118-billion opportunity awaits manufacturers in the next five years with the need to create oil and gas transportation infrastructure growing.

Indian pipe makers are set to benefit from the global demand-supply imbalance and their participation in the global demand boom is visible from their expanding order book size.

The US, West Asia, followed by the domestic market, are likely to be the major volume drivers for pipe makers with the three geographies accounting for more than 40 per cent of the global demand of around 75 million tonnes for SAW pipes.

According to the latest study by ICICI Direct, companies are set to corner 19 per cent of the total global demand in the years to come.

"The country's fast losing competitiveness in the global steel pipes and tubes market has been revived with the withdrawal of the export duty," an industry source said, adding since the duty was levied a month ago, the country lost market share to China, especially in North American and West Asia, where India enjoys a strong foothold.

Currently, domestic manufacturers enjoy an order book of Rs 17,000 crore, 70 per cent of which is accounted for by export contracts. With high crude prices, oil producing companies in West Asia are flush with funds and, hence, they are expanding their capacities.

About one-tenth of the projects planned globally are coming up in the region. Indian firms have a competitive advantage of being closer to the region vis-a-vis players in Europe and Japan.

"Now, pipe makers are deferring plans to set up manufacturing units in exporting country," said an executive from Man Industries, one of the leading steel pipe makers in India.

"Domestic demand is also growing fast because of growing pace of urbanisation. But, abolishing export duty would surely provide a gain over competitors," Bihar Tubes Managing Director Sanjay Gupta said.

On May 10, the government notified a 10 per cent export duty levy on exports of steel pipes and tubes in order to control rising steel prices. The duty was rolled back on June 13 with a number of representations from the industry.