ACCELERATING GROWTH

Changing sector fundamentals are fostering optimism and driving robust demand for pipes, fueling growth

India’s pipe sector has once again captured the attention of analysts, with estimates projecting revenue growth for well-placed pipe companies in the country in the next one year. The expected growth rate is approximately 30% for FY25 when compared to revenues of FY24. This optimism is rooted in the changing fundamentals of the sector, as the demand situation has improved drastically and considerably.

Let us understand exactly what has changed to support these optimistic revenue estimates in the sector:

DEMAND DRIVERS

The demand drivers for India’s pipe market can be divided into three broad categories: Welded Line Pipes, which include Electric Resistance Welded (ERW) and Submerged Arc Welded (SAW) pipes; Seamless Pipes; and Ductile Iron (DI) Pipes. Within the ERW pipes category, it is worth noting that more than 90% of the production consists of lower-quality pipes, which are mostly used in infrastructure and construction sectors.

There are a few sources of demand for pipes, and these sources are expected to drive strong demand for the sector in the coming years. These sources include government reforms, construction, infrastructure (especially metals), and real estate. Let us examine how each of these sectors is likely to generate fresh demand for pipes:

• Construction

ERW pipes find extensive usage in the construction sector. These pipes are integral in the construction of airports and railway stations, refineries, automobiles, agricultural implements, solar tracking systems, gym, and construction equipment, among other applications. In the past few years, ERW pipes have been increasingly replacing traditional long products such as angles, channels, and beams at airports, plants and railways.