Indian steel pipe makers to increase capacity due to rising demand

Indian steel pipe makers to increase capacity due to rising demand

Surging oil and gas demand worldwide and the energy with which oil companies are investing in adding new pipelines and infrastructure is promising increased demand and revenues for Indian steel pipe makers. Saw Pipes Ltd., Man Industries (India) Ltd., PSL Holdings and Welspun Gujarat Stahl Rohren, four leading pipemakers in India, plan to collectively invest close to Rupees 4 billion ($86 million) on expanding production capacities this fiscal year. According to expert analysts, a huge pent-up demand for pipes has developed over the past several months. Pipes are the most efficient and economical way to transport oil and gas for the refining industry. Currently, only about one-third of India's petroleum products are transported through pipelines. Recent research projects indicate that gas supply in India will increase at least 2-3 times in the next five years. Further, according to analysts' reports, over the next 3-4 years, an estimated 17'000 kilometers of pipelines will be needed to meet the total demand of the oil and gas sector in India. These analysts state that even if only 50% of these projects become realized, Indian pipe companies will still experience huge surges in business opportunities. The increase in steel prices has been a negative factor for pipe producers; however industry officials state that they have been partially able to incorporate steel price hikes into the costs of the projects.