The local Indian cold rolled coil (CRC) market has come under severe pressure during the past week with prices slumping by INR 2,000/mt ($30/mt) week on week to INR 38,500/mt ($573/mt) ex-works, amid a combination of bearish indicators, traders said on Tuesday, July 12.
“The CRC market has fallen sharply during the past week, with one of the sharpest falls in prices in recent years,” a Mumbai-based trader said.
“A perfect bear market has emerged with the combination of rising inventories across market segments and aggressive discounting by mills and dealers,” he said.
“At the macro level, these factors have emerged at a time when Indian steel consumption is seen to be falling, reflecting the long-term depression of demand and impacting sentiment across the market,” the trader added.
Government data released showed that Indian steel consumption in June this year was down 4.2 percent to 6.8 million, the first decline in the last 15 months. Sources said that the fall in consumption has largely been driven by the drastic decline in imports and several downstream users are seen to be reducing their off-take of higher-priced domestic steel and this has unnerved steel market intermerdiaries.
Sources said that, given the huge inventory build-up at large steel mills most of which had reported a rise in production levels during the April-June quarter, the mills are offering unofficial hefty volume discounts of INR 1,000/mt ($15/mt) but there are no takers either and this has depressed market sentiment and activity.
The sources said that dealers too are saddled with large stocks and have been forced to drastically reduce prices and are even pushing volumes into the market at negative margins to maintain cash flows.