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Indian Pipe Industry - For Indian Customer

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Published : March 2010 Quick Buy Area

No.of Pages : 98
Price : US$ 440.60 (Rs. 20,000.00)

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The Indian Pipe Industry11.tuned for the piping hot market

The 2008-09 financial crisis had a limited impact on the Indian pipe industry affecting new oil and
gas exploration and production (E&P) projects worldwide due to fall in global commodity prices
including crude oil resulting into reduced orders. With the worst of the financial crisis behind us, we
remain optimistic regarding the potential demand for the pipe sector. The E&P projects which were
earlier stalled or revoked are being given a new lease of life based on the inevitable rise in crude oil
prices. Replacement demand from developed nations remains ever so strong while domestic
demand from the oil and gas sector is robust. Also, with the pipeline network of India for oil & gas
transport being lower at 17,576 kms as on April 2009, (32% penetration level) it represents a huge
scope for growth for the pipe industry.

As most of the Indian pipe manufacturers are converters, the industry is highly Raw Material (RM)
intensive with the RM cost accounting for more than 70-80% of the total cost for steel and PVC
pipe companies. These companies rely heavily on imports and hence many steel pipe companies
have backward integration facilities to reduce dependency on imports and price volatility. Freight
cost is another key cost component due to higher imports and exports. With the expected
short-term increase in commodity prices and range-bound Baltic Dry Index (a barometer for
shipping freight rates), pipe companies will be benefited in the coming quarters as customers will try
to place advance orders at attractive rates.

Indian companies produce a wide range of steel, cement and plastic pipes which are used in
various critical and non-critical applications. Indian steel pipe manufacturing companies have won
several certifications and accreditations from major oil & gas companies across the globe in the
recent past. With the low-cost and high-quality products supplemented by various international
certifications, Indian companies have augmented their export sales over the last three to four years.

CARE Research expects the positive trend in the Indian pipe industry to continue for the next 3-5
years on the back of higher E&P activities due to resurgence in crude oil price, increased efforts by
the Government of India (GoI) on infrastructure development for laying pipelines for oil & natural
gas transport (e.g. the National Gas Grid project), replacement demand from North America and
European countries, water & sewage transport and irrigation facilities. The growth will mainly be
driven by steel pipes especially SAW pipes. The order-book position (currently equivalent to total of
FY09 sales) of many steel pipe companies is sufficient for the next 9-12 months.

Demand triggers for the growth are:

Private players like Reliance Industries Limited (RIL), Cairn India etc have shown interest in
setting up pipe infrastructure for oil & gas distribution. National gas grid will also be set up
requiring an investment of Rs.210 bn.
City gas pipe is currently available in 10 cities and the coverage is expected to grow to 40
cities in the next five years, entailing an investment of Rs. 250-300 bn.
In addition to the above, the replacement demand from the US and European countries,
having a vast pipeline infrastructure, will be huge.
The GoI in its efforts to reduce crude imports has formulated the New Exploration Licensing
Policy (NELP) for exploration and production of oil & gas. The GoI has awarded 256 blocks
till date and the number is set to increase to 330 by 2010.
For the Eleventh Five Year Plan, the GoI is aiming to add 11 mn hectares of irrigational
facilities, entailing an investment of Rs.1,580 bn.

The GoI increased the annual budget allocation under the Rajiv Gandhi Drinking Water Mission from
Rs.65 bn to Rs.74bn in the previous Union Budget 2009-10.

For an in-depth analysis and CARE Research’s view on the future of this sector, please refer to the
exhaustive Report on Indian Pipes Industry by CARE Research.

The report elucidates the facts on the Indian pipe industry, backed by the latest available industry
data. Emphasis is laid on the following topics to accomplish the report:

Industry overview
Industry features elaborated with respect to fragmentation, durability, capital intensiveness,
accreditations and duty structure.
Statistical information on all types of pipes – current installed capacities, planned capacities,
demand projections from oil & gas segment, city gas pipe projects, replacement market,
water & sewage, irrigation and replacement demand.
Global information on capacities – existing & planned and global demand projection for pipes
from oil & gas segment.
Cost and pricing analysis with emphasis on Raw Material (RM) cost, Freight cost and Power
& Fuel cost and comments on the industry margins and the average realizations of key
A brief overview of seven key pipe companies with their latest three years data on financial
and operational parameters, their strengths and weaknesses and corporate actions of these
Sales for leading players in Steel, Plastic and Cement Pipes for the period FY2004-05 to
FY2008-09 along with the exports data of the industry.
Outlook and Challenges for the pipe industry.

Table of Contents:

Executive Summary
CARE Research’s Outlook and Challenges (Steel and Plastic Pipes)

Supply –Demand
Steel Pipes
Domestic Installed Capacity of Pipes (FY2009-10)
Global Statistics
Demand Projection (FY2013-FY2015)
Domestic Demand – Supply Gap
Plastic Pipes
Global Market for plastic pipes
Domestic market

Demand Drivers
Pricing Information
Steel Pipes
PVC Pipes
Cement Pipes

Cost Analysis
Raw Materials (RM) Costs
Product-wise RM cost Analysis
Company-wise RM cost analysis
Freight and Forwarding Expense
Power and Fuel (P&F) Cost
Industry Margins

Analytical Model
SWOT Analysis
Porter’s Five Force Model

Company Overview
Welspun Gujarat Stahl Rohren Ltd
Man Industries (India) Ltd
Jindal Saw Ltd
Electrosteel Castings Ltd
The Indian Hume Pipe Co. Ltd
Finolex Industries Ltd

Industry Overview
Steel pipes
Seamless pipes
Electric Resistance Welded Steel Pipes (ERW)
Spun Pipes
Ductile Iron Pipes in India
Asbestos Cement (AC) Pipes
Characteristic and Applications of HDPE Pipes
Key characteristics of HDPE pipes
Major applications of HDPE pipes

Industry Characteristics
Capital Intensiveness and Fragmentation
Lower Transportation Losses and Durability
Cheap Mode of Transport
Reputation and Accreditations
Working Capital Intensive
Duty Structure
Quality Raw Material (RM) Availability
Range of Products

Key company-wise pipeline projects
Existing and proposed Gas pipelines in India
Existing and proposed product pipelines
GAIL’s proposed pipeline expansion
Spot OPEC Reference Basket Price (Average) – Oil ($/b)
Proven Oil & Gas reserves
Crude Oil Production (1,000 b/d)
Consumption of refined products (1,000 b/d)
Sales of leading players in steel pipes excluding seamless pipes
Sales of seamless pipe players
Sale of cement pipe player
Sales of plastic pipe players
Exports Data
Chart representing Indian Pipes Industry according to usage
Performance Global Pipe Companies

Index - Figures

Demand & Supply

Total global HSAW production
Total Global LSAW production
Pipe penetration levels
World energy consumption by fuel type – Historical and Forecasted
Life Structure of gas pipeline
Life Structure of Oil pipeline
Global Plastic Pipes Market
Global Plastic pipes market share in 2006
Europe - Pipe consumption pattern
USA- Pipe consumption pattern

Pricing Information
Metal Trends Index Indicating Sentiment on Prices over the next 3 months

Cost Analysis
Domestic Prices: HR Coils
Domestic Prices: Billets
Domestic Prices - Cement (wholesale)
Domestic Prices - PVC
International – Ethylene Price Chart
Baltic Dry Index
Company-wise Cost Analysis Chart for FY08-09
Average Industry Ratios

Industry Overview
Global GDP Growth Rate %
Domestic GDP Growth Rate %
Indian Rural – Urban population divide
Dismal Sanitation Levels
Classifications of Pipes
DI pipes: Major players and Market share
Pipe manufacturing process
Demand drivers
Pipe demand drivers
Break-up of demand drivers for pipe industry

Index - Tables

Supply -Demand
Domestic SAW and Seamless pipes capacity scenario (FY2009-10)
Global (excluding India) planned HSAW Pipe Capacities
Globally planned LSAW Pipe Capacities
Global (excluding India) planned ERW pipe capacities
Major Transnational gas pipeline projects
Major oil & gas pipeline projects planned in India
Global pipeline projects – Region wise demand till 2014
Several large pipeline projects planned in N. America
Order book position of pipe companies (as of December 2009)
oil & gas pipeline mileage in US
Existing Gas Pipelines in other Developed Nations
Active Water Supply and Irrigation projects in India
Region-wise Current Gas Usage (%)
Gas Demand-Projections for the Eleventh-Plan (in mmscmd)
Exploratory and Development Drilling activities in India
Metreage Drilled
Global per capita Consumption of Plastics (kgs)
Total Domestic Pipe demand
Total Domestic Plastic Pipe Demand

Pricing Information
Average price realisations of steel pipes
Average price realisations of PVC Pipes
Average price realisations of PVC Pipes

Cost Analysis
RM consumption
RM expense as a % of total cost
RM Cost Analysis – Product-wise
Cement Price Chart
HDPE India broad statistics
Domestic and International HDPE – Average Raw Material Prices
Domestic Average RM prices
Freight expense as a % of total cost
Freight expense (Rs. cr.)
Power & Fuel expense as a % of total cost
Power & Fuel expense (Rs cr.)
Average Industry Ratios

Industry Overview
Applications of various types of steel / iron pipes and their other key parameters

Industry Characteristics
Certifications & Accreditations by major pipe companies
Working Capital cycle
RM price movement for key materials is presented below
RM consumption details for FY09

Foreign Customers kindly click here

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Plastic Pipe & Parts Manufacturing in the US
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