India Pipe Makers Depend on Imported Steel as Local High-Grade Supply Lags

India's steel mills are not producing enough of the specialized grades used in oil and gas pipelines, forcing pipe makers like Jindal SAW Ltd to rely on imports for 35–40% of their supply, the company's managing director said in an interview.

“Indian steel market doesn't really produce a lot of steel for higher API applications,” Sminu Jindal told Mint. “I wish the steel makers do make better high-grade API steel. So we don't have to do it and we can actually sell a product that is completely made in India.”

That gap is widening as India itself turns a net importer of finished steel. Provisional Joint Plant Committee data showed finished steel imports rose 49.2% year-on-year to 2.064 million tonnes in the April-June quarter, while exports rose 31.4% to 1.593 million tonnes.

Domestic steelmakers have started developing the required grades, but volumes are too small to make them commercially competitive, Jindal said. Companies like JSW Steel and Jindal Steel & Power have supplied some grades to Jindal SAW, while AM/NS India recently developed grades such as X100. But higher grades including N60 and N65 are still not produced domestically, she said.

“If you do not have the volume, then the pricing is also high,” Jindal said.

For Jindal SAW, the economics of imports remain more attractive even as the company would prefer local sourcing if the right grades were available at competitive prices. “For us, it makes more sense to import and export because that way we save a lot of duties and it helps us survive better,” she said.

The company has no fixed target for reducing import dependence because the availability of specialized steel is largely outside its control, Jindal said.

Mint reported on June 22 that domestic manufacturers continue to rely on imports from China, Japan and South Korea for certain critical-grade steel used in oil and gas pipelines. These grades are either not produced domestically or have not yet received the required certifications from end users, Dhruv Goel, chief executive of commodities market intelligence firm BigMint, told Mint earlier.

Jindal SAW's international business is facing disruption from the ongoing conflict in West Asia. “Unfortunately shipping and the way the logistics have turned out are not very productive that way for Jindal SAW. Therefore, we have seen a lot of delays in the project,” Jindal said. She expects the disruption to eventually create new opportunities as West Asian countries look to build alternative routes and strengthen their oil and gas infrastructure.

The global pipe industry should grow faster than the broader economy, with demand across oil, gas and water expected to rise 5–8% compared with global GDP growth of around 2–3%, Jindal said.

Jindal SAW currently gets about 60% of its business from the water industry and about 40% from oil and gas. The mix could shift if more oil and gas projects emerge in India, she said.

With uncertainty around the West Asia conflict, the company is taking a cautious approach to capital expenditure. “We do not know how the war shapes up. So, everybody is trying to conserve as much cash at this moment, as much as possible,” Jindal said. Jindal SAW has outlined capital expenditure of ₹500–600 crore for the current fiscal year, Vinay Kumar Gupta, president and head of treasury at Jindal SAW, told analysts in April.

Jindal SAW shares have gained 60.10% year-to-date, outperforming the benchmark Nifty 50, which fell 6.96% over the same period. In the last fiscal year, the company reported a 14% fall in revenue from operations to ₹17,895 crore from a year earlier, while net profit fell 40% to ₹973.35 crore.

The company has overall manufacturing capacity of more than 3.5 million tonnes per annum across its SAW pipes, ductile iron pipes and fittings, carbon/alloy steel seamless pipes, and stainless-steel seamless and welded pipes and tubes businesses. It also operates a 1.65 million tonnes per annum pelletization facility at Bhilwara, Rajasthan.