Arrow keeps big inventories for growing business

Dec 23, 2018
4 min read
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Naresh Santani, vice chairman of Arrow Pipes & Fittings speaks to Pipeline Magazine about company’s business, future plans and market outlook

How is your company involved in the oil and gas industry?

We are the leading distributors for Line Pipes, Fittings and Flanges and have been serving the oil, gas and petrochemical industry for over 25 years. We are involved in distribution and project business, and have over the years invested in inventories and facilities to ensure that we emerge as the strongest brand in the supply of seamless and welded line pipe, fitting, flanges and accessories. I must say, this has been successful, as today we are one of the largest stockiest and have a very strong reputation in the MENA region.

What is your key market and where are you looking to expand?

Our key markets have been Middle East and North Africa. However, due the favourable geographic location of Dubai, and the incredible facilities offered by Jebel Ali Free Zone (JAFZ), where we are headquartered, we have been successful in penetrating into the Far East markets like Singapore, Malaysia, Thailand and Indonesia. We have already expanded from 35,000 square meters in 2012 to 85,000 square meters of stocking facilities and have three distribution centres in JAFZ.

We are very happy with the port facilities and the efficiency of JAFZA and in fact are looking to expand further with another facility focussed on speciality steel tubular goods, like Stainless, Duplex, Super Duplex and Alloy steels, which will cater to the power, construction, energy and ship building industries in addition to oil, gas and petrochemical industries.

In which areas of business do you see demand for growth?

We see a lot of growth coming in from the energy sector, and thus we see power generation business picking up in the near future.

At this time, as crude prices have risen sharply, we are seeing a good demand from Kuwait, Abu Dhabi and Kingdom of Saudi Arabia, which are our most crucial markets. We expect this demand to be consistent until 2022 as projects are being awarded to the EPC contractors and we are receiving a lot of interest on both distribution and project deliveries.

Also, the construction sector seems to be busy until the EXPO 2020 within the UAE.

What new projects and markets are you working on at the moment or will begin in the near-term?

As of now, we are extremely busy in Kuwait and Kingdom of Saudi Arabia, as many projects have kick started due to the rise in crude prices and budgets are more relaxed. On the other hand, last 2-3 years saw major consolidation in the steel market in Europe and China and many weaker manufacturers were forced to close down leaving only the fittest to survive. This has created a kind of an equilibrium where some manufacturers already have their capacities completely booked out until Q2 of 2019.

We sit on an inventory of 45,000 - 50,000 metric tons at any given point and an order book of over 18,000 metric tons only for the distribution business. So, as of now, our distribution business is keeping us busy with clients in the Far East, India, KSA, UAE and Kuwait.

On the project side as well, we enjoy exclusive distribution from world class mills like Tenaris (Italy & Argentina ), Vallourec (Germany & Brazil), NSSMC (Japan) on the seamless side and JFE Japan on the Welded front, which helps us get preferential allocations in such times where clients are hungry for quick deliveries. This has kept us busy and we thank our suppliers for their support.

What is your outlook for pipes in the Middle East oil and gas market?

The pipe market in the Middle East has seen tremendous volatility in terms of demand and pricing and the prices have recently risen due to external factors more than mere economics. So the market will self-adjust and prices will be more stable in the near future. However, for the next 2 years there will be a hangover effect of the current rise in projects.

Again, the middle east pipe market is influenced a lot by external factors; for instance, the anti-dumping which is currently being considered by UAE, KSA, Bahrain, Oman and Qatar, will have a direct impact  on pricing of imported Steel Pipes, which in turn will reflect in the demand for the same. So, you can see a lot of extrinsic factors are affecting the way the pipe market reacts in the Middle East. So, let’s hope for the best!