The stable trend in the local Indian cold rolled coil (CRC) market proved to be short-lived with downward pressures emerging and prices losing INR 750/mt ($11/mt) during the past week to INR 40,500/mt ($602/mt), in reaction to reports of mounting inventories at local steel mills coupled with sluggish demand conditions, traders said on July 5.
“The price correction in the CRC market has been expected. The stability of prices last month was misleading as it was observed against a backdrop of negligible market activity,” a Mumbai-based trader said.
“Most mills are reported to be facing mounting inventories. For example, a mill such as Essar Steel reported a massive 48 percent rise in flat steel production for April-June 2016,” the trader said.
“Clearly rising production and inventories have been impacting prices and dealers too are seen to be reducing fresh bookings in response to sluggish demand,” he added.
Sources said that the market was also unsure whether local steel mills would adjust July prices to the current situation although at least two traders said that the steel mills are expected to maintain prices unchanged for the month and instead to offer discounts as in the case of other flat products like hot rolled coil (HRC).